Proposed Changes in Capital Requirements for US Banks
The Federal Reserve, together with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, is reportedly considering a new strategy to adjust capital requirements for the largest banks in the country.
Background
The original policy set by the new regulation is under review due to pressure from industry leaders like JPMorgan Chase CEO Jamie Dimon.
New Strategy
Under the new plan, the capital increase requirements for banks such as JPMorgan Chase and Goldman Sachs would be reduced to slightly over 50% of the initially proposed amounts.
Purpose of the Increases
These increases aim to ensure that banks have sufficient capital to mitigate potential losses and prevent financial instability.
Current Status
While the new capital rules are not yet finalized, negotiations for substantive and technical modifications are ongoing among officials from the regulatory agencies.
Industry Response
Major US banks argue that they are adequately capitalized and view the proposed changes as non-essential. The banking industry has strongly criticized the Basel proposal, claiming that it could lead to significant disruptions in products and services.
Lobbying Efforts
For example, Goldman Sachs has mobilized small business owners to voice their opposition to the proposal in Washington, part of the industry’s efforts to influence government decisions on capital regulations.
