The Federal Reserve unveiled it’s planning to scale back an proposal to raise capital requirements for banks after politicians and the banking industry...
The Federal Reserve unveiled plans that would massively scale back a proposal to raise capital requirements for banks after politicians and the banking industry pushed back on the initial plan, warning it could restrict lending and hurt the economy.
Fed Governor Michelle Bowman argued that the plan needed "substantive changes" and that an increase in capital requirements at the scale proposed by regulators could significantly harm the economy. Fed Governor Chris Waller also argued the plan needed a major overhaul.Barr said the changes reflect the feedback the Fed received from the public and that it improves the tiering of the proposal, and better reflect risks.
The goal of the Basel committee — which was convened by the Bank for International Settlements in Basel, Switzerland — was to set global regulatory capital standards so that banks would have enough in reserves to cover unforeseen losses and survive crises. “We are attentive to the interactions across all components of our capital framework as well as the combined burden and benefits, and we take these issues seriously,” Barr added.
David Hollerith is a senior reporter for Yahoo Finance covering banking, crypto, and other areas in finance.
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