Stricter rules for 8 big US lenders
Source: Agencies |
July 10, 2013, Wednesday
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Print Edition
Print Edition
REGULATORS want to require eight of the largest United States banks to meet a stricter measure of health to reduce the threat they pose to the financial system.
The Federal Reserve, the Federal Deposit Insurance Corp and the Office of the Comptroller of the Currency were expected to propose yesterday that banks increase their ratio of equity to loans and other assets from 3 percent to 5 or 6 percent.
Equity includes money banks receive when they issue stock, as well as profits they have retained.
The rule would apply to eight US banks considered so big and interconnected that each could threaten the global financial system: Goldman Sachs, Citigroup, Bank of America, JPMorgan Chase, Wells Fargo, Morgan Stanley, Bank of New York Mellon and State Street Bank.
The move follows action the central bank took last week to increase the capital large banks must maintain as a cushion against risk.
Other regulators are also expected to adopt that rule. It would require the banks to maintain high-quality capital equal to 4.5 percent of their loans and other assets.
The higher capital requirements were mandated by Congress in the financial overhaul law. They also meet global standards agreed to after the financial crisis.
Daniel Tarullo, a Fed governor, said last week the regulators will apply four new rules to the eight banks.
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