WASHINGTON – Federal regulators are proposing that the eight biggest U.S. banks be required to further increase the amount of capital they set aside to cushion against unexpected losses.
The Federal Reserve’s proposal is aimed at lessening the chances of future taxpayer bailouts of troubled banks. The proposed requirements also are designed to encourage the behemoths to shrink so they pose less risk to the financial system. The banks include JPMorgan Chase, Citigroup and Bank of America.
The Fed governors are voting Tuesday to advance the so-called “capital surcharges.” They would increase in proportion to how risky the regulators deem a bank to be. A key risk factor would be how much a bank relies on short-term funding markets to borrow from other banks. Those markets seized up during the financial crisis.