Wall Street Journal Summary – US regulators reconsider capital hike for big banks, WSJ reports
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Key Facts Section
- The Federal Reserve and two other U.S. regulators are considering reducing a nearly 20% mandated increase in capital for the country’s biggest banks following lobbying from industry CEOs.
- Officials from the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency are discussing revisions to the rule but no agreement has been reached as yet.
- Last year, the three regulators proposed a change to how banks with over $100 billion in assets calculate their capital reserved for potential losses. Banks argue that they are already highly capitalized and the changes are unnecessary.
The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) are reportedly considering a new plan that could significantly reduce a planned 20% increase in required capital for America’s largest banks. This follows lobbying efforts by industry leaders such as JPMorgan Chase CEO Jamie Dimon.
Last year, these three bank regulators proposed a revamp to how banks with more than $100 billion in assets calculate the money they need to reserve for potential losses. Known as the Basel proposal, this initiative aimed to strengthen banks against potential losses, decreasing the risk of bank failures or bailouts. However, the big U.S. banks have protested against the proposal, arguing it would force them to either overhaul or close a variety of products and services.
While revisions to the proposal are being discussed by the regulatory officials, it is yet to be confirmed if an agreement will be reached. The Fed and the FDIC have refrained from commenting on the issue, and the OCC has not responded to requests for comment.
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