Tags: bank | capital | rules | Fed

Fed to Vote Tuesday on Bank Capital Rules

Thursday, 27 Jun 2013 04:19 PM

 

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U.S. regulators will move next week toward finalizing much-anticipated plans to boost U.S. banks' required capital when the Federal Reserve Board of Governors plans to vote on the final rules.

The Fed said on Thursday it would hold an open meeting on July 2 to discuss the capital requirements.

The Fed, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. proposed rules last June to implement a global capital agreement known as Basel III.

That accord is a key part of efforts by international regulators to make sure the banking system is more resilient after the 2007-2009 financial crisis.

But the United States and other countries are months behind on finalizing rules to implement the agreement. The financial industry has closely monitored regulators' progress toward finishing the requirements.

Under the Basel agreement, banks would use complicated assessments of the riskiness of their portfolios to determine how much equity capital they would need. Regulators also set a minimum leverage requirement, or ratio of capital to total assets, of 3 percent.

That agreement, which would be phased in through 2019, would force most banks to maintain about three times as much top-quality capital as is required under existing rules.

Banks, particularly smaller ones that have said the rules could be costly, have agreed that they need more capital cushions but said the proposed U.S. rules go too far.

Many U.S. regulators and reform proponents, on the other hand, argued for a higher leverage ratio in the United States, particularly for the biggest banks. Two U.S. senators have proposed hiking that level up to 15 percent for the largest firms.

The Fed has not yet released the final version of the rules. Tuesday's vote will be the first step toward implementing them.

The FDIC and the OCC also must approve the rules. The FDIC, which includes the comptroller of the currency as a board member, has not announced a meeting to discuss the rules.

© 2014 Thomson/Reuters. All rights reserved.

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