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  • bluecheese4u bluecheese4u Jul 2, 2013 2:37 PM Flag

    Federal Reserve approves new capital standards for big banks

    Federal Reserve approves new capital standards for big banks

    Peter Schroeder - 07/02/13 11:03 AM ET

    The Federal Reserve on Tuesday approved sweeping new capital standards for the nation’s biggest banks.

    In a vote that was unanimous, the Fed agreed to final rules implementing the international Basel III accord, a global agreement that was reached among regulators to beef up capital cushions after the 2008 financial crisis.

    "Capital will act as a financial cushion to absorb future losses," said Federal Reserve Chairman Ben Bernanke. "Strong capital requirements are essential if we hope to have safe and sound banks."

    The Fed's approval marks the beginning of the end for what has been a highly contentious debate over the rules that govern the financial industry.

    After global regulators agreed to strengthen capital standards in 2010, the financial industry fought back with aggressive lobbying efforts in Washington and other capital cities. Reflecting the intense focus, the Fed said it had received more than 2,600 comments in all on the proposed Basel rule.

    Fed Governor Daniel Tarullo called the new requirements "a milestone in our post-crisis efforts to make the financial system safer."

    "Along with the stress testing and capital review measures we have already implemented, and the additional rules for large institutions that are on the way, these new rules are an essential component of a set of mutually reinforcing capital requirements," Tarullo said.

    Large banks would have to begin complying with the new rules at the beginning of 2014, while smaller banks would have an extra year to prepare.

    Community banks were vocally critical of the original Basel proposal, which would have subjected them to the same requirements as Wall Street giants.

    The Fed tried to address those concerns, and said community banks would feel a "minimal" impact from the new rules because 90 percent of small banks already meet the new standards.

    The Independent Co

 
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