Fed Passes 1%-4.5% Capital Surcharges for Major Banks

The Federal Reserve passed a proposal on Tuesday for risk-based surcharges on the most important U.S. banks to the global financial system.

These surcharges would require the eight U.S. banks with $50 billion or more in consolidated assets to maintain an additional capital supply based on the institution’s system importance, the Fed said Tuesday. The framework for these charges would be phased in beginning January 2016 through January 2019.

The Fed will now wait for comment on the proposal before officially codifying the rule.  “This framework would provide incentives to these banking organizations to hold substantially increased levels of high-quality capital as a percentage of their risk-weighted assets. This, in turn, would encourage such firms to reduce their systemic footprint and lessen the threat that their failure could pose to overall financial stability,” Fed Chair Janet Yellen said in her opening statement at the Tuesday meeting.


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