US regulators reconsider capital hike for big banks
THE Federal Reserve and two other US regulators are moving towards a new plan that would significantly reduce a nearly 20 per cent mandated increase in capital for the country’s biggest banks following lobbying efforts by industry CEOs like JPMorgan Chase’s Jamie Dimon, The Wall Street Journal reported on Sunday (May 19).
Top officials from all three agencies involved in the pending capital rules – the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) – are still discussing substantive and technical revisions and there is no guarantee that an agreement will be reached, the WSJ reported.
The Fed and the FDIC declined to comment on the report, while the OCC did not immediately respond to Reuters’ request for comment.
The three bank regulators, led by the Fed, in July last year unveiled a proposal to overhaul how banks with more than US$100 billion in assets calculate the cash they must set aside to absorb potential losses.
The Basel proposal aims to make banks more resilient to potential losses, lowering the risk of failures or bailouts. Banks say that they are already highly capitalised and the changes are unnecessary.
Big US banks have lobbied against the Basel proposal, which they say will force them to overhaul or shut down a range of products and businesses.
Goldman Sachs recruited dozens of small business owners to travel to Washington and urge lawmakers to reconsider the proposal, a Reuters review of private Goldman documents, interviews with programme participants and public disclosures show.
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