The Wall Street Journal reported on Monday that U.S. authorities are prepared to tighten regulations for major banks, which may raise their capital requirements by an average of 20%.
This move is being made to enhance the resilience of the financial system in the wake of a number of failures experienced by smaller banks this year.
According to the WSJ, which cited individuals with knowledge of the situation, the regulatory agencies are on pace to propose the modifications as soon as this month.
Following a series of failures at financial institutions in the United States, the top regulatory official at the Federal Reserve in the United States recently informed Congress that the central bank will likely disclose its proposal to ratchet up capital limits for banks this summer and guarantee that supervisors more aggressively police lenders.
Capital requirements for US banks may increase by 20%
Vice Chair of the Federal Reserve for Supervision Michael Barr stated that the Federal Reserve was “carefully considering” the possibility of changing the regulations that apply to bigger regional banks.
According to the Wall Street Journal, the actual amount of capital needed would depend on the operation of the bank, with U.S. megabanks that have major trading activities projected to suffer the highest increases in capital requirements.
According to the Wall Street Journal, financial institutions such as Morgan Stanley and the credit card giant American Express, which are highly dependent on fee income from activities such as investment banking or wealth management, might potentially be subject to significant capital increases. T
he requests for comments made by Reuters were not immediately met with a response from either Morgan Stanley or American Express.