U.S. Weighs Doubling Leverage Standard for Biggest Banks
By Yalman Onaran
U.S. regulators are considering doubling a minimum capital requirement for the largest banks, which could force some of them to halt dividend payments. The standard would increase the amount of capital the lenders must hold to 6 percent of total assets, regardless of their risk, according to four people with knowledge of the talks. That’s twice the level set by global banking supervisors. While more capital for the biggest lenders might make sense for financial stability in the long-run, the timing of the move might prove harmful, said Karen Shaw Petrou, managing partner of Washington-based research firm Federal Financial Analytics Inc. “Banks called upon to hike capital when markets are so volatile could end up draining current capital, undermining credit availability,” Petrou said. “That could disrupt markets still more to start the adverse feedback loop all over again.”