Large lenders in the US may face a 20% increase in capital requirements in the aftermath of a string of collapse of smaller regional lenders this year, according to the Wall Street Journal.
The revised requirements could be proposed as early as June, and is dependent on lenders’ activities, according to the report, citing people it didn’t identify. Institutions with large trading businesses would take the biggest hit while those heavily dependent on fee income could also face significant increases, the report said.
Banks with at least $100 billion in assets may have to adhere to the new requirement, lower than the existing $250 billion threshold, for which regulators have reserved their most stringent rules, according to the report.
Michael Barr, the Federal Reserve’s vice chair for supervision, has previously said that US officials are reviewing bank capital requirements and committed to putting in place strictures that align with the global Basel III standards. Barr, who took over as the Fed’s top bank watchdog in July 2022 and an architect of the Dodd-Frank Act of 2010, has also signaled that he supports tougher restrictions for bigger, systemically important lenders than smaller institutions.
The Fed is playing a leading role in crafting the measure, along with the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, according to the WSJ. All three agencies are expected to seek comment on the proposed capital rules before voting to complete changes and eventually implementing them over the coming years, the report said.
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon was among critics blasting on more cumbersome capital requirements, calling an upcoming increase “bad for America” last year ahead of a pair of congressional hearing.
