The Federal Reserve
on Tuesday proposed new rules that could allow some large banks to reduce the
amount of capital they must hold as a cushion against a future economic shock.
The proposal may
clear the way for some large banks to reduce their capital levels in the future
but the largest firms on Wall Street are not likely to get such relief, the Fed
The proposal is
expected to reduce bank paperwork and also make it easier for regulators to
monitor the health of banks, said Randal Quarles who is the top Fed official in
charge of regulations.
measures are most effective when they are as simple and transparent as
possible,” Quarles, the Fed Vice Chairman for Supervision, said in a statement.
The Fed said the
proposed changes are likely to somewhat increase the amount of capital required
for the 30 largest banks known as GSIBs or global systemically important banks.
The measures should
modestly decrease the amount of capital required for banks smaller than the
GSIBs, the Fed said.
“No firm is expected
to need to raise additional capital as a result of this proposal,” the Fed said
in a statement.
Banks and other
stakeholders will have 60 days to comment on the proposal that is likely to
take effect next year, said the Federal Reserve.
The new capital
standards would be the first reform of capital standards conceived after the
decade-old financial crisis.
The new capital
standard would be called the ‘stress capital buffer’ and work in tandem with
the annual Fed checkup on bank health known as the ‘stress test’.
here for the original article from Reuters.