So reports business newspaper The Wall Street, based on anonymous sources. Following the collapse of a number of smaller regional banks earlier this year, the capital requirements of large banks will be increased by an average of 20 percent due to upcoming stricter regulations, the sources said.
The new rules could be announced as early as this month, according to the newspaper. The specific buffer increase of each individual bank will depend on its activities. The riskier they are, the more money a bank has to keep aside.
In the aftermath of the 2008 financial crisis, bank capital requirements around the world were greatly increased to prevent a repeat. In recent years, however, under former President Donald Trump, these rules were relaxed for smaller banks in the United States.
In March, there was much unrest in the U.S. banking sector following the collapse of Silicon Valley Bank and Signature Bank. This was because customers withdrew a lot of money from their accounts at these banks in a matter of days.
First Republic also faced the same problem and collapsed. That bank was then bought by JPMorgan Chase, the largest bank in the US. As a result, calls for stricter regulations increased again.
Michael Barr, the Federal Reserve’s vice chairman for supervision, said earlier that U.S. officials will review banks’ capital requirements and bring them more in line with the requirements of Basel III, the international standards for banks’ capital requirements.
In doing so, Barr also hinted at being a proponent of stricter rules for such major U.S. banks as Bank of America, JPMorgan Chase, Citigroup and Wells Fargo.
About the author: Rick Culpepper
Rick Culpepper is of those journalists who dig the topic to the very bottom. He is often late with the delivery of the piece, but always does it perfectly. In his spare time, he collects data for one of the most high-profile investigations of corruption in the EU.