Fed Officials Warn Of Stricter Capital Requirements On Banks
Fed officials signaled they’ll toughen the capital requirements on big banks even more than they have since the 2008 crisis—a move that’ll put more pressure on the largest US banks to shrink.
Fed governors Daniel Tarullo and Jerome Powell both said the central bank would force eight of the largest US banks to hold more equity in order to pass the Fed’s annual stress tests.
“Effectively, this will be a significant increase in capital,” Tarullo said on Bloomberg TV.
Tarullo said he expects the Fed moves to force big banks to change their size, organization or business model, the Wall Street Journal reports.
“I have not reached any conclusion that a particular bank needs to be broken up or anything like that,” Tarullo said at a banking conference. The point is to “raise capital requirements to the point at which it becomes a question that banks have to ask themselves.” [WSJ]
