Federal Reserve Vice Chair Michelle Bowman announced Thursday that major banks will face slightly lower capital requirements under revised banking regulations. The changes represent a win for Wall Street institutions that had opposed stricter capital rules in earlier proposals.
WASHINGTON – Major financial institutions will see a modest reduction in their capital requirements following revisions to comprehensive banking regulations, Federal Reserve Vice Chair for Supervision Michelle Bowman announced Thursday. The announcement marks a significant win for large banks that had successfully opposed more stringent capital increases proposed in previous versions.
During remarks delivered at the Cato Institute in Washington, Bowman detailed modifications to what are known as Basel rules and the “GSIB surcharge” – regulations that dictate the amount of money financial institutions must reserve to cover potential losses. She described the changes as creating an overall decrease in capital requirements for major banks through what she termed a “sensible recalibration” of current regulations.
Bowman, who received her appointment to the position last year under Republican President Donald Trump, explained that the revisions would remove duplicate standards and adjust requirements to better reflect the actual risk levels faced by banks. She criticized the ongoing trend of requiring banks to maintain increasingly higher reserves against possible losses.
“When capital requirements become excessive, they impair the banking system’s fundamental function of providing credit to the real economy,” she stated in her prepared speech.
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