WASHINGTON—The country’s largest banks may be required to boost their capital by as much as 20% if regulators get their way, according to a new report.
The move is designed to force the nation’s largest institutions to shore up their finances following the failure of a number of larger banks earlier this year, failures that are leading to special assessments to replenish the FDIC’s deposit insurance fund. The precise amount of additional capital to be retired will depend on a firm’s business activities, with the biggest increases expected to be reserved for U.S. megabanks with big trading businesses, according to the Wall Street Journal.
“Banks that are heavily dependent on fee income—such as that from investment banking or wealth management—could also face large capital increases,” the report stated. “The plan to ratchet up capital is expected to be the first of several steps to beef up rules for Wall Street, a shift from the lighter regulatory approach taken during the Trump administration.”
Banks Say Increases Not Needed
The Journal noted banks have responded by saying the more stringent requirements aren’t needed, could force more banks to merge to stay competitive and could make it harder for Americans to get loans from banks.
“Tougher rules were already on the way for the biggest lenders before the March failures of Silicon Valley Bank and Signature Bank sent tremors through the industry,” the Journal reported. “Since then, regulators have said they plan to apply new rules to a wider range of banks.”
Institutions with at least $100 billion in assets might have to comply, effectively lowering an existing $250 billion threshold for which regulators have reserved their toughest rules, according to the Journal.
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