Fed Lifts Capital Requirements for Banks
(Worthy News) – The Federal Reserve sent a message to the largest U.S. financial firms: Staying big is going to cost you, the Wall Street Journal reported.
The Fed’s warning, articulated in a pair of rules it finalized Monday, is among the central bank’s starkest postcrisis regulatory moves pressing Wall Street banks to reconsider their size and appetite for risk.
J.P. Morgan Chase & Co., the largest U.S. bank with assets worth $2.449 trillion, will have to maintain more capital than any of its peers, with its minimum capital requirement raised by 4.5% of assets under management as a result of the new rule. J.P. Morgan has resisted calls from lawmakers and others to break up its operations, and instead has jettisoned or adjusted businesses to comply with the new mandates.
Of the eight big banks, only J.P. Morgan doesn’t have enough capital to meet the rule, which comes into full effect in 2019. The bank has a $12.5 billion shortfall, according to Fed officials. J.P. Morgan executives have said they believe they can cut businesses and take other actions to meet the deadline. [ Source ]
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