The Federal Reserve Board’s vice-chair of supervision, Michael Barr, today unveiled sweeping changes to a proposed increase in the amount of capital banks must hold to protect them in the event of a meltdown. He slashed requirements of giant banks by half, and completely removed medium-sized banks, those with assets between $100 million and $250 million from the requirements.
The initial proposal unveiled last year would have increased capital requirements of the largest U.S. lenders by 19%—money that would otherwise be available to invest in other projects or loaned out to businesses and individuals. The new proposal still increases the requirement, but only by nine percent. The Consumer Financial Protection Bureau mandated by the U.S. government to protect bank users declined to comment.
