The Vice Chairman of the Federal Reserve proposes to strengthen supervision by requiring banks to keep more "family owned" assets | banking industry | banks
On the 10th, Michael Barr, the Vice Chairman of the Federal Reserve responsible for regulatory affairs, proposed multiple suggestions to strengthen banking regulation, requiring banks, especially medium-sized and above banks with assets exceeding $100 billion, to raise more capital and consolidate the stability of the banking industry.
United States: The Vice Chairman of the Federal Reserve proposes to strengthen supervision and requires banks to prepare more "assets"
Federal Reserve Vice Chairman Barr announced a comprehensive package of recommendations during an event at the US Two Party Policy Research Center, including the final implementation of Basel III by medium-sized and above banks with assets exceeding $100 billion. This agreement is an international banking regulatory agreement reached after the 2008 financial crisis, requiring bank capital to have a ratio of at least 8% to risk weighted total assets. At present, the US banking industry has not fully implemented the agreement. Barr stated that his proposal will require banks to hold an additional 2 percentage points of capital, which means they need to hold an additional $2 in capital for every $100 of risk weighted assets.
The Vice Chairman of the Federal Reserve suggests expanding the scope of annual bank stress tests
In addition, suggestions also include: banks need to report the impact of asset losses on their capital levels to better reflect their true ability to make up for losses; Stop allowing banks to independently assess credit risks; Expand the scope of the Federal Reserve's annual bank stress tests, etc.
US banking lobbying group: higher capital requirements will drive up borrowing costs
Since March this year, Silicon Valley Bank, Signature Bank, and First Republic Bank in the United States have been hit and closed one after another, causing panic in the market about the operational flexibility of regional banks in the United States. These three banks have assets of over 100 billion US dollars. According to Agence France Presse, Bar's proposal this time will strengthen supervision of banks with assets above $100 billion, thereby encouraging more banks to comply with the Federal Reserve's relevant risk control rules. Currently, these rules only apply to international financial institutions or banks with assets above $700 billion. Many lobbying groups of banking giants have expressed opposition to this, stating that higher capital requirements will drive up borrowing costs, thereby suppressing consumer and corporate lending activities and putting the US economy at risk of slowing down.
Media analysis suggests that these regulatory rule reform proposals will be subject to public review, and even if adopted by the Federal Reserve, they may take several years to take effect.
