Regulators back bank capital standard
Bank holding companies would have to maintain the same capital levels as their federally insured banking units under a proposal issued by U.S. bank regulators on Tuesday.
The move by the Federal Deposit Insurance Corp was required by a portion of this year's Dodd-Frank financial overhaul law that aimed to bolster the finances of bank holding companies after weakness was seen during the 2007-2009 financial crisis.
Bank holding companies sometimes relied on their insured depositary institutions as a source of capital strength when regulators say the opposite should have been the case.
The FDIC voted to put the proposal out for 60 days of comment, seeking feedback on how it should be implemented.
Details were scarce in Tuesday's proposal for a permanent capital floor but it would replace the current system where there are shifting minimum capital levels.
U.S. banks, pushed in part by industry regulators, have already built large reserve pools of capital in the wake of the financial crisis.
The largest American lenders are preparing for new international capital rules, called Basel III, which will be phased in over the next several years, requiring banks to maintain an 8 percent core capital ratio.
A question surrounding the FDIC proposal is how it will mesh with Basel III, which was endorsed in November by leaders from the Group of 20 developed and emerging nations.
The details of that agreement are still being hammered out and U.S. regulators have yet to consider how to implement it.
(Reporting by Dave Clarke; Additional reporting by Joe Rauch in Charlotte, N.C.; Editing by Tim Dobbyn)
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