The top US banking regulator has announced sweeping changes to the capital rules governing midsized lenders as part of a broader package of new regulatory standards, in a bid to shore up a financial system rattled earlier this year by a string of bank failures.
Michael Barr, vice-chair for supervision at the Federal Reserve, on Monday unveiled regulatory changes for institutions with $100bn or more in assets, proposing harsher capital standards that will require banks to stow away additional capital to better prepare for emergent risks and which can be used to absorb any losses.
The proposals come months after the failures of Silicon Valley Bank, Signature Bank and First Republic sparked fears about the resilience of regional lenders.
“In an obvious way, the failures of SVB and other banks this spring were a warning that banks need to be more resilient, and need more of what is the foundation of that resilience, which is capital,” Barr said at an event hosted by the Bipartisan Policy Center in Washington DC.