Governor Barr on next steps on bank capital rules

Yesterday, Federal Reserve Board Vice Chair for Supervision Michael S. Barr spoke on The Next Steps on Capital at the Brookings Institution in Washington. Governor Barr agreed that it is critical that banks have the capacity to continue lending to households and businesses through times of stress, and that bank capital rules help to ensure that banks are holding capital commensurate with the risks of their activities and the risks they pose to the U.S. financial system.

However, said Governor Barr, two current proposed rules that would modify risk-based capital requirements for big banks need broad and material changes to better balance the benefits and costs to increasing capital requirements. To that end, Governor Barr intends to recommend that the Board of Governors re-propose the Basel endgame and global systematically important banks surcharge rules to give the public the opportunity to fully review a number of changes to the original proposals and provide comments.