WASHINGTON—The U.S. Federal Reserve on Tuesday outlined a multipronged plan to place the nation’s largest banks under stricter capital requirements to guard the financial system from risks posed by “too big to fail” companies.
Fed officials said they hope to act in the coming months on four proposals aimed at the eight largest U.S. firms considered “systemically important” to the global economy, including Goldman Sachs Group Inc., Bank of America Corp. and J.P. Morgan Chase & Co.
Fed governor Daniel Tarullo, the agency’s point man on regulation, said regulators could soon propose a higher leverage ratio, which is expected to fall between 5% and 6%, for the largest banks. This capital measure gauges equity against total assets and is favored by some regulators as a measure of a bank’s ability to withstand stress. The Federal Deposit Insurance Corp. said it will consider the leverage proposal early next week.
Regulators are also working on: a requirement that these banks hold a minimum amount of long-term debt, a separate charge based on a firm’s reliance on volatile forms of short-term funding, and a special surcharge agreed upon by international regulators.
Source: WSJ
Source: WSJ
