|MARTIN CRUTSINGER, AP Economics Writer|
The Fed voted 7-0 on Tuesday to approve the 792-page rule. The changes were mandated by the 2010 financial overhaul law and an international agreement.
The rule must also be approved by the
Banks had lobbied to modify the requirements on higher capital, saying they could hamper their ability to lend. But experts said most big banks have already increased their capital reserves.
"With these revisions to our capital rules, banking organizations will be better able to withstand periods of financial stress, thus contributing to the overall health of the U.S. economy," said Fed Chairman
Critics say the rule failed to go far enough and kept taxpayers are risk of having to bail out banks again, should they suffer the kinds of losses incurred during the crisis.
"The rule announced by the Federal Reserve today fails to learn the lesson of the most recent crisis and makes the next crisis — and more bailouts — more likely," said
Under the rule, all banks will need to maintain a level of high-quality capital equal to 4.5 percent of their loans and other assets, weighted by how risky those assets are.
A Fed staff memo said that all bank holding companies with more than
The final rule dropped a provision from an earlier draft that required banks to hold higher amounts of capital for mortgage loans judged to be risky. The change was made after the housing industry and smaller community banks argued against this rule. They objected because they said it would restrict mortgage loans at a time when the housing industry was still struggling to recover.
"The smaller banks did ok and the mortgage lobby had its voice heard," said
Fed officials also signaled Tuesday that they are considering moving forward on even tougher standards for the nation's largest banks.
Fed board member
He said there were four rules being considered that would increase capital requirements for eight big banking organizations that have been identified as having global systemic importance. This group includes
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