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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsBanks Ordered to Add Capital to Limit Risks
Banks Ordered to Add Capital to Limit Risks
By PETER EAVIS
Updated, 9:08 p.m. | Federal regulators on Tuesday approved a simple rule that could do more to rein in Wall Street than most other parts of a sweeping overhaul that has descended on the biggest banks since the financial crisis.
The rule increases to 5 percent, from roughly 3 percent, a threshold called the leverage ratio, which measures the amount of capital that a bank holds against its assets. The requirement more stringent than that for Wall Streets rivals in Europe and Asia could force the eight biggest banks in the United States to find as much as an additional $68 billion to put their operations on firmer financial footing, according to regulators estimates.
Faced with that potentially onerous bill, Wall Street titans are expected to pare back some of their riskiest activities, including trading in credit-default swaps, the financial instruments that destabilized the system during the financial crisis.
In that respect, some regulators and advocates for tougher financial regulation said, the new rule is a more straightforward tool that will be harder to evade and easier to enforce than many of the new regulations covering the sprawling, complex businesses of banking. Capital is important to banks because it acts as a buffer for potential losses that might otherwise sink an institution.
- more -
http://dealbook.nytimes.com/2014/04/08/regulators-set-to-approve-new-capital-rule
By PETER EAVIS
Updated, 9:08 p.m. | Federal regulators on Tuesday approved a simple rule that could do more to rein in Wall Street than most other parts of a sweeping overhaul that has descended on the biggest banks since the financial crisis.
The rule increases to 5 percent, from roughly 3 percent, a threshold called the leverage ratio, which measures the amount of capital that a bank holds against its assets. The requirement more stringent than that for Wall Streets rivals in Europe and Asia could force the eight biggest banks in the United States to find as much as an additional $68 billion to put their operations on firmer financial footing, according to regulators estimates.
Faced with that potentially onerous bill, Wall Street titans are expected to pare back some of their riskiest activities, including trading in credit-default swaps, the financial instruments that destabilized the system during the financial crisis.
In that respect, some regulators and advocates for tougher financial regulation said, the new rule is a more straightforward tool that will be harder to evade and easier to enforce than many of the new regulations covering the sprawling, complex businesses of banking. Capital is important to banks because it acts as a buffer for potential losses that might otherwise sink an institution.
- more -
http://dealbook.nytimes.com/2014/04/08/regulators-set-to-approve-new-capital-rule
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Banks Ordered to Add Capital to Limit Risks (Original Post)
ProSense
Apr 2014
OP
ProSense
(116,464 posts)1. Kick! n/t
Wounded Bear
(58,601 posts)2. Not sure this is enough...
but it looks like a good first step.
ProSense
(116,464 posts)3. Sherrod Brown:
Senator Sherrod Brown, Democrat of Ohio, who has introduced a bill with Senator David Vitter, Republican of Louisiana, that envisions higher leverage ratios than those approved on Tuesday, said, Todays rule is a major step forward, but we can and must do more.
Wounded Bear
(58,601 posts)4. Good to see some are still actively working on it...nt