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US regulators discuss finalizing bank capital rules as soon as August, Bloomberg News reports

Published 05/01/2024, 12:58 PM
Updated 05/01/2024, 05:59 PM
© Reuters. FILE PHOTO: Storm clouds gather over the U.S. Federal Reserve Building before an evening thunderstorm in Washington June 9, 2006. REUTERS/Jim Bourg/File Photo

(Reuters) -The Federal Reserve and other top U.S. regulators are forging ahead with their plan to make big banks hold more capital, Bloomberg News reported on Wednesday.

Key officials have decided to adjust the original proposal rather than starting over and some of them are pushing to finalize it as soon as August, the report said, citing people familiar with the matter.

The Federal Deposit Insurance Corporation, the Federal Reserve, and the Office of the Comptroller of the Currency declined to comment.

The Basel proposal implements international capital standards agreed by the Basel Committee on Banking Supervision following the global financial crisis.

Bank regulators led by the Fed in July last year unveiled the "Basel III" proposal to overhaul how banks with more than $100 billion in assets calculate the cash they must set aside to absorb potential losses.

The main areas of focus are credit risk, market risk and operational risk. According to banks, the draft goes further than the Basel accord and overstates their risks.

© Reuters. FILE PHOTO: Storm clouds gather over the U.S. Federal Reserve Building before an evening thunderstorm in Washington June 9, 2006. REUTERS/Jim Bourg/File Photo

U.S. banks have also argued that they are well capitalized, having withstood the COVID-19 pandemic and regularly clearing the Fed's annual stress tests, and any capital hikes are unjustified.

Reuters in March reported that regulators were expected to significantly reduce the extra capital banks must hold under a proposed rule that has drawn aggressive pushback from Wall Street.

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