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Federal Reserve says it may ask banks for extra capital in a crisis

Friday, September 9, 2016 - 07:04

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Large US banks may have to boost their reserves to protect against losses in the face of a financial crisis, the Federal Reserve said on Thursday as it outlined exactly how it may demand such capital.

[WASHINGTON] Large US banks may have to boost their reserves to protect against losses in the face of a financial crisis, the Federal Reserve said on Thursday as it outlined exactly how it may demand such capital.

If regulators determined that the financial system was threatened they could call for more bank reserves - known as the "countercyclical capital buffer."

On Thursday the Fed promised not to move abruptly but to give leading banks ample time to sock away more capital if such a measure was necessary.

JPMorgan Chase & Co, Bank of America Corp and Wells Fargo & Co are among the roughly 10 banks that would have to answer to the new rules.

The emergency measure was conceived in the Dodd-Frank legislation and is designed to fortify banks against catastrophic losses.

The proposal is one of the latest meant to prevent a repeat of the 2008 financial crisis.

REUTERS

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