FDIC joins Fed in proposing stricter capital rules

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WASHINGTON (AP) — U.S. banks would have to keep a bigger cushion against unexpected losses under rules proposed by the Federal Deposit Insurance Corp. The requirements are intended to prevent another financial crisis.

An FDIC board voted 5-0 Tuesday to join the Federal Reserve in advancing the proposals. The Fed acted last week. All U.S. banks would be required to hold capital, stable money not at risk, that's worth at least 7 percent of their assets. That's up from a current minimum of 2 percent and is in line with international standards.

The requirements were mandated under the 2010 financial overhaul.

Two of the FDIC directors, Thomas Hoenig and Jeremiah Norton, expressed concerns that the requirements as proposed may not be strict enough to tame the risk of another crisis.

Nearly all U.S. banks already meet the requirements, which will be phased in over seven years. Still, banks have lobbied strenuously against the proposals. They say having to set aside such large capital reserves could limit what they could lend.

The rules are open to comment until September and will be finalized after that.

"We are taking important steps toward enhancing the safety and soundness of the U.S. financial system," said U.S. Comptroller of the Currency Thomas Curry, who also is one of the FDIC board members.

Acting FDIC Chairman Martin Gruenberg noted objections raised by smaller banks that the capital requirements would be unfairly onerous for them. The agency is planning "outreach" programs in its regional offices to explain the proposed rules to smaller banks, he said.

The FDIC also finalized rules for additional capital requirements for banks that hold at least $1 billion in assets such as complex financial derivatives that they trade with other banks. The final rules were adopted by the Fed on Thursday. Banks in this category include JPMorgan, Citigroup Inc., Bank of America Corp. and Goldman Sachs Group Inc.

A formula will be used to determine the additional amounts that each bank will have to set aside.

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