US Regulators To Uncover Plan For Banks To Build Cash Reserves
by upasana sarbajna Finance 27 July 2023
The regulators in the United States are prepared to propose a regulation that might increase capital requirements for bigger banks, thus compelling them to cut down costs and retain earnings. This step is taken to cushion potential losses. This rule will be proposed to the Federal Reserve and the Federal Deposit Insurance Corporation today. It looks forward to overhauling how banks have been measuring their riskiness and how much they must keep in hand. Critics, however, have already started opposing it, arguing that the increases are unjust and have potential economic harm. Topmost officials have claimed that stricter regulations could result in a potential pullback from the services or an increase in the fees.
The regulators in the US are all prepared to propose a rule that might significantly increase capital requirements for major banks, compelling them to cut down costs and maintain earnings in an attempt to cushion against the potential losses that might harm investors and customers.
The proposal that is set to be revealed on Thursday, and is voted on by the Federal Reserve and the Federal Deposit Insurance Corporation, marks the first in a substantial attempt to tighten bank oversights, particularly during the wake of the spring commission that witnessed the failure of three big financial firms.
The rule, which is said to implement an agreement that was set by global regulators in 2017, looks to overhaul how banks size their riskiness and reversibly how much money they must keep in hand.
The industry opponents have, however, started to criticize the plan already as banks look forward to delaying, softening, or otherwise derailing the long-planned effort of the government.
“The banking industry probably didn’t influence the upcoming proposal as much as it wanted. But it’s determined to fight on what it sees as major issues in the months between Thursday and whenever a final rule is approved,” – Ian Katz, M.D, Capital Alpha Partners, Washington D.C.