The Wall Street Journal reported on Monday that U.S. regulators are getting ready to tighten regulations for large banks, which may increase their capital requirements by 20% on average in order to strengthen the financial system’s resilience following a wave of midsize bank collapses this year.
According to the WSJ, regulators are on track to suggest the modifications as early as this month.
The top regulatory official for the U.S. Federal Reserve told Congress last month that the bank would probably announce its strategy this summer to tighten capital requirements for banks and ensure that supervisors police institutions more vigorously in the wake of bank failures.
Vice Chair for Supervision of the Fed Michael Barr, the central bank was “carefully considering” changing the rules to apply to bigger regional banks.
The exact amount of capital requirements would depend on the bank’s line of business, according to the Wall Street Journal, with U.S. megabanks with significant trading operations anticipating the biggest rises.
According to the Wall Street Journal, banks that rely largely on fee income from investment banking or wealth management, like Morgan Stanley and credit card juggernaut American Express, may also need to raise a lot more capital.
The request for comments was not immediately answered by Morgan Stanley or American Express.
