Three proposals to essentially lower the regulatory capital requirements “for banks of all sizes” was released Thursday by the federal banking agencies.
According to the Office of the Comptroller of the Currency (OCC), the proposals “would improve the calculation of risk-based capital requirements to better reflect the risks of these banking organizations’ exposures and facilitate more effective supervisory and market assessments of capital adequacy.”
The Federal Reserve, in a separate statement, said the proposals would modernize the regulatory capital framework for banks of all sizes and would “streamline capital requirements and better align regulatory capital with risk while maintaining the safety and soundness of the banking system.”
The Federal Deposit Insurance Corp. (FDIC) Board issued the proposals after its meeting Thursday. The agency indicated that the proposals were issued after “experience has demonstrated” that certain parts of the regulatory capital framework adopted following the global financial crisis of nearly 20 years ago “could be improved without reducing safety and soundness.”
The FDIC acknowledged that the changes proposal could result in a modest decrease in the overall capital in the banking system. However, the agency asserted, “capital levels would still be substantially higher than they were before the financial crisis.”
“In aggregate, the proposals would modestly reduce capital requirements for large banks and moderately reduce requirements for smaller banks, reflecting their more traditional lending activities,” the FDIC said.
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