Federal Reserve Board Seeks Comment on Proposal to Simplify its Capital Rules for Large Banks
Federal Reserve Board Seeks Comment on Proposal to Simplify its Capital Rules for Large Banks

In a recent press release, the Federal Reserve Board announced that it is seeking “comment on a proposal that would simplify its capital rules for large banks while preserving strong capital levels that would maintain their ability to lend to households and businesses under stressful conditions.”

"Our regulatory measures are most effective when they are as simple and transparent as possible, and this proposal significantly simplifies our capital regime while maintaining its strength," Vice Chairman for Supervision Randal K. Quarles said. "It is a good example of how our work can be done more efficiently and effectively, and in a way that bolsters the resiliency of the financial system."

Key changes that the proposal would introduce include:

  • A "stress capital buffer" which could integrate stress test results with the Board's non-stress capital requirements. In turn, this would affect large banking organizations’ capital requirements.
  • A requirement to maintain or increase the amount of capital required for global systemically important banks (GSIB), while decreasing the amount of capital required for most non-GSIBs.
  • Updates to assumptions in the Comprehensive Capital Analysis and Review (CCAR) process to better align them with a firm's expected actions under stress.
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