Senate proposal a US$66b capital boon for US banks

New York

A US Senate proposal to raise the level at which banks are deemed systemically important could help free up as much as US$66 billion in capital at 11 lenders and allow for increased shareholder payouts.

If lawmakers approve the most extensive rewrite of the 2010 Dodd-Frank Act, it would remove an obstacle to returning capital for firms such as American Express Co, which has the largest percentage buffer over required minimums, and Capital One Financial Corp, which would have the most additional capital on a dollar basis, according to data compiled by Bloomberg.

The Senate Banking Committee was scheduled on Thursday to debate a Bill by chairman Richard Shelby, an Alabama Republican, that would exclude banks with less than US$500 billion of assets from being automatically designated as systemically important financial institutions, or SIFIs. If the measure becomes law and the Federal Reserve adopts similar limits in its annual st…