Eight U.S. “Big Banks” Likely To See New Fed-Mandated Capital Surcharges
The Fed today proposed capital requirements on 8 banks that could exceed global minimums by up to 4.5%. Worried about the systemic risk of banks reliant on short-term market funding the Federal Reserve proposed new capital rules on big banks that would see eight firms needing to
meet surcharges of about $21 billion in the aggregate. The banks in question are: JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc (NYSE:C), Bank of America Corp (NYSE:BAC), Goldman Sachs Group Inc (NYSE:GS), Morgan Stanley (NYSE:MS), Wells Fargo & Co (NYSE:WFC), Bank of New York Mellon Corp (NYSE:BK) and State Street Corp (NYSE:STT). While there will be no shortage of opposition to the proposed rules, the Fed quickly pointed out that “almost all” of the eight meet the proposed requirements. In an effort to avoid a repeat of 2008, the Fed has taken aim at the amount banks borrow from institutional investors with short-term contracts.
“The U.S. once again chooses to go its own way and exceed international minimums,” Karen Shaw Petrou, managing partner of Washington-based research firm Federal Financial Analytics Inc., told Bloomberg before today’s announcement. “If they squeeze the big banks too much, they’ll force some out of some businesses.