Copyright: | (c) 2011 The Associated Press. All rights reserved. |
Source: | Associated Press |
Wordcount: | 268 |
The Fed currently requires the 19 largest U.S. banks to submit capital plans annually. The proposal unveiled Friday would expand the list to the 35 largest banks by requiring firms with assets of
Capital is the amount of reserves that a bank holds as a cushion against losses. If the Fed determines a bank doesn’t have adequate capital, it can order it to stop paying dividends to stockholders. The central bank is taking comments on the proposal through August and has plans to implement it by January.
The financial overhaul law passed last year directed federal regulators to do a better job monitoring the level of capital that banks keep on hand. Banks have been fighting many of the more stringent controls being imposed under last year’s legislation. They contend the tighter rules are not necessary and will restrict their ability to make loans.
In testimony to
Those rules will require big banks and other financial institutions such as hedge funds and insurance companies to be subject to more strict requirements if their failure could endanger the entire economy. Those rules governing institutions judged to be systemically important are also scheduled to go into effect in January.
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