Big US Banks Can Easily Meet Higher Capital Demands
Most lenders already meet proposed average 19% boost, and regulators are confident that all shortfalls can be made up even as dividends continue.
The capital call has come from Michael Barr, vice chair for supervision at the Federal Reserve.
Photographer: Al Drago/BloombergBig US banks will have to clear significantly higher capital hurdles under long-awaited proposals announced by regulators Thursday. The good news for investors is that most of them are already there — and the few that aren’t should easily meet the tougher demands well before they need to.
The biggest lenders contend that higher capital requirements will increase costs for customers and could threaten some kinds of lending or trading activities. This might be partly true, but at the same time stiffer standards should make the banking system more stable, and they could bolster depositors’ faith in smaller banks by forcing them to manage risks as prudently as their bigger rivals.