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US regulators reconsider capital increase for big banks, reports WSJ
(Reuters) -The Federal Reserve and two other U.S. regulators are moving toward a new plan that would significantly reduce a mandatory capital increase of nearly 20% for the nation’s largest banks, following lobbying efforts by industry CEOs such as Jamie Dimon of JPMorgan Chase, the Wall Street Journal reported on Sunday.
The capital increases needed by banks like JPMorgan and Goldman Sachs, designed to ensure they have enough reserves to absorb potential losses, would, on average, be about half of what was originally launched, the Journal added.
Senior officials from the three agencies involved in the pending capital rules – the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency – are still discussing substantive and technical revisions and there is no guarantee that an agreement will be reached. . , the WSJ reported.
The Fed, FDIC and OCC declined to comment on the report.
The three banking regulators, led by the Fed, presented a proposal in July last year to overhaul the way banks with more than $100 billion in assets calculate how much money they should set aside to absorb potential losses.
The Basel proposal aims to make banks more resilient to potential losses, reducing the risk of bankruptcies or bailouts. Banks say they are already highly capitalized and the changes are unnecessary.
Big U.S. banks have lobbied against the Basel proposal, which they say will force them to revamp or exit a range of products and businesses.
Goldman Sachs recruited dozens of small business owners to travel to Washington and urge lawmakers to reconsider the proposal, a Reuters analysis of private Goldman documents, interviews with program participants and public disclosures shows.
(Reporting by Surbhi Misra and Disha Mishra in Bengaluru; Editing by Leslie Adler, Lisa Shumaker and Sandra Maler)