Federal Regulators Propose Easing Bank Capital Rules to Spur Lending
The Federal Reserve aims to relax certain bank capital requirements, potentially allowing financial institutions to lend more and stimulate economic growth.
Federal banking regulators are proposing to ease some capital requirements for the largest U.S. banks, a move that could potentially free up tens of billions of dollars for lending and investment. The plan, unveiled by the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC), is aimed at encouraging more lending and economic activity while still maintaining adequate safeguards against risk.
Under the current rules, the largest banks must hold capital equal to at least 10% of their risk-weighted assets. The new proposal would lower that ratio to 8% for the global systemically important banks (G-SIBs), a group of about a dozen of the country's largest financial institutions. This change could potentially free up an estimated $40 billion to $100 billion in lending capacity across the banking system, according to industry estimates.
Michelle W. Bowman, the Federal Reserve's vice chair for supervision, said the adjustments are designed to encourage bank lending and support the economy without undermining the stability of the financial system.
Source: The New York Times
