Federal Reserve Reduces Proposed Capital Requirements for Largest US Banks
Tuesday, 10 September 2024, 08:03
Federal Reserve Revises Capital Requirement Plans
The Federal Reserve has announced a revision to its capital requirement proposal for the largest US banks, reducing the increase from 19% to 9%. This change follows significant pushback from the banking sector and political leaders. The new rules apply to institutions with assets of $100 billion or more.
Impact of Changes on Banking Sector
- Michael Barr, the top regulator, described the adjustments as a response to feedback.
- The Financial Services Forum indicated it would review and comment on the revisions.
- Wall Street lobbyists had warned that initial proposals could negatively affect lending, the economy, and minority communities.
Operational Risk Requirements Modified
- The rules will reduce capital requirements related to operational risks.
- Non-lending businesses, such as asset management, are now largely excluded from operational risk evaluations.
- Additionally, an internal loss multiplier affecting capital requirements has been eliminated.
This move is characterized by Barr as an interim step, indicating future adjustments might be on the horizon.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.