Tarullo Says Fed to Require Largest U.S. Banks to Increase Capital Levels

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Tarullo Says Fed to Require Largest U.S. Banks to Increase Capital Levels
 
By Craig Torres and Joshua Zumbrun - Nov 4, 2011 5:01 PM ET

 Fed Will Require Banks to Increase Capital, Tarullo Says

The U.S. Federal Reserve stands in Washington, D.C. Photographer: Andrew Harrer/Bloomberg

The Federal Reserve will compel the largest U.S. banks with $50 billion or more in assets to take “affirmative steps” to increase capital during the phase-in of higher capital standards.

“The Federal Reserve will require bank holding companies that are subject to our proposed capital plan rule, generally companies with $50 billion or more in total assets, to take affirmative steps to improve capital ratios, such as external capital raises,” ensuring compliance deadlines under U.S. and international guidelines in Basel III, Fed Governor Daniel Tarullo said today in Washington. He was referring to the bank capital agreements by global regulators who meet in Basel, Switzerland.

Global regulators said in June banks deemed too big to fail must hold as much as 2.5 percentage points in additional capital as part of efforts to prevent another financial crisis. The additional capital buffers will range from 1 percentage point to 2.5 percentage points, the Basel Committee on Banking Supervision said. A total of 29 lenders may have to meet the requirements, including firms such as Deutsche Bank AG, BNP Paribas SA and Goldman Sachs Group Inc., according to plans approved today by the Group of 20 nations .

Read More Here: http://www.bloomberg.com/news/2011-11-04/tarullo-says-fed-to-require-largest-u-s-banks-to-increase-capital-levels.html

Is this article saying the U.S. Federal Reserve Bank requires 29 lenders.....outside the U.S. to meet the requirements? Seems to me that the U.S, Federal Reserve Bank should now be titled "The World Federal Reserve Bank".......

[ivanm]

It appears to me that the Basel Committee on Banking Supervision, which is a global regulatory thing, has set the parameters.  It could be that the FRS had a hand in the decision.

At first glance this seems to be a good thing to do, but I really don't understand how the monstrous banks work.  They have so many different operations going on that there is no telling how much loss they can slip into a profitable component of their business and still look good.  It reminds me of GE Capital, which was taking hits, and yet the parent company, GE, was still strong and profitable.

[lucy]

The Federal Reserve creates the money for the international banks in the first place. So, let them figure out a way to pay back our banks what they have given to foreign banks in our name.