{"id":2001891,"date":"2023-08-15T21:39:02","date_gmt":"2023-08-16T01:39:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/fed-official-calls-for-significantly-tougher-bank-regulations-sending-shares-plunging\/"},"modified":"2023-08-15T21:43:12","modified_gmt":"2023-08-16T01:43:12","slug":"fed-official-calls-for-significantly-tougher-bank-regulations-sending-shares-plunging","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/fed-official-calls-for-significantly-tougher-bank-regulations-sending-shares-plunging\/","title":{"rendered":"Fed official demands stricter bank regulations, causing shares to plummet."},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">20<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Ffed-official-calls-for-significantly-tougher-bank-regulations-sending-shares-plunging%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2001891&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><div data-post-content=\"true\" class=\"post_content\" id=\"post_content\">\n<p>A top Federal Reserve official has called for tougher regulations \u200dfor regional banks, saying on Tuesday\u2064 that the recently unveiled regulatory proposal for more stringent \u2063bank\u2062 capital\u2062 requirements \u200cdon&#8217;t go far enough, with the\u2063 S&#038;P 500 banking index plunging to a one-month low.<\/p>\n<p>Speaking at a\u200c <a href=\"https:\/\/www.youtube.com\/watch?v=1nXwjXTpPDs\" target=\"_blank\" rel=\"noopener\">town hall in Minnesota<\/a> on Aug.\u200b 15, Minneapolis Federal Reserve\u200c President Neel Kashkari\u2063 was asked about \u200ca <a href=\"https:\/\/www.theepochtimes.com\/article\/in-depth-regulators-propose-tougher-bank-capital-requirements-as-basel-iii-endgame-nears-5427248\" target=\"_blank\" rel=\"noopener\">recent proposal<\/a> put forward \u2064by\u2062 U.S. banking regulators to make \u2064bigger banks hold more capital as an emergency buffer \u200din \u2064times of\u2064 crisis.<\/p>\n<p>The new proposed framework (<a href=\"https:\/\/www.fdic.gov\/news\/board-matters\/2023\/2023-07-27-notice-dis-a-fr.pdf\" target=\"_blank\" rel=\"noopener\">pdf<\/a>), dubbed the &#8220;Basel III endgame,&#8221; would force\u200c applicable U.S. lenders to set aside billions of dollars overall in order to bolster their ability to absorb losses when \u200cthings get tough.<\/p>\n<div class=\"shortcode\">\n<div class=\"mb-4 mr-4 w-full max-w-[500px] border border-[#D3D3D3] px-5 py-4 text-[16px] leading-[20px] text-[#262626] md:float-left\">\n<div class=\"mb-3 font-sans text-[16px] font-semibold uppercase leading-[19px] text-[#2F2F2F]\">Related Story<\/div>\n<div class=\"mb-4 flex gap-2\">\n<div class=\"grow\">\n<div class=\"mb-1 line-clamp-2\"><a href=\"http:\/\/www.theepochtimes.com\/world\/rba-governor-expects-house-prices-to-increase-after-interest-rate-hikes-end-5458757\">RBA Governor \u2064Expects\u2063 House \u2062Prices to \u2064Increase \u2064After Interest \u200bRate Hikes End<\/a><\/div>\n<div class=\"text-[14px] leading-[18px] text-[#737373]\">8\/11\/2023<\/div>\n<\/p><\/div>\n<div class=\"shrink-0 basis-[120px]\"><a href=\"http:\/\/www.theepochtimes.com\/world\/rba-governor-expects-house-prices-to-increase-after-interest-rate-hikes-end-5458757\"><\/a><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>All told,\u200d the \u200drules would collectively require qualifying\u200b U.S. banks \u200cto hold an\u200c additional 2 percentage\u2064 points in capital above current \u2064levels.<\/p>\n<h2 class=\"engaging-heading\">Doesn&#8217;t Go Far Enough<\/h2>\n<p>Regulators have expressed confidence that\u200c America&#8217;s banks\u2063 could handle the additional \u200cburden \u2064associated with the tougher capital requirements.<\/p>\n<p>Some \u200din the \u200bbanking industry\u200b have warned\u2062 that the\u2063 proposed rules would raise\u200d borrowing costs for consumers and damage the economy.<\/p>\n<div class=\"shortcode\">\n<div class=\"lazyload-wrapper\">\n<div class=\"lazyload-placeholder\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>While\u200b the proposed rules only apply to bigger banks with total\u2062 assets above $100 billion, Mr. \u2064Kashkari \u200bsaid that he thinks the regulatory net should \u2062be cast more widely.<\/p>\n<p>&#8220;My own personal \u200bopinion is it doesn&#8217;t go far\u200c enough. \u200dI think it&#8217;s a step in the right direction, but I would like to go significantly further,&#8221; he said at Tuesday&#8217;s\u200d Q&#038;A \u2062at APi Group&#8217;s Global \u2063Controllers Conference in Minneapolis.<\/p>\n<p>As Mr. Kashkari spoke about more \u2062government regulation, shares of regional lenders PacWest \u2063Bancorp, Zions Bancorp, and Western Alliance Bank\u200b slipped, closing the day&#8217;s trading \u200csession down between 3.7 percent and 4.5 percent.<\/p>\n<p>The\u2064 S&#038;P 500 banking index dropped 2.75 percent, a one-month\u2062 low, while the KBW\u200c regional banking \u2064index plunged 3.4 percent.<\/p>\n<p>The drops \u200calso came as Fitch Ratings <a href=\"https:\/\/www.theepochtimes.com\/business\/fitch-warns-it-might-downgrade-dozens-of-us-banks-after-slashing-americas-credit-rating-5466764\" target=\"_blank\" rel=\"noopener\">warned that<\/a> it may be forced\u2062 to downgrade\u200b a number of individual U.S. banks if it cuts\u200b its assessment of the overall banking industry&#8217;s operating environment. A Fitch\u2062 analyst suggested that\u200d an overall\u2062 industry downgrade was \u200bincreasingly likely.<\/p>\n<p>In\u200d his remarks, \u2063Mr. Kashkari said\u200c he thinks \u200dthe U.S. banking\u200d sector is generally stable although there could be some more flare-ups in the future,\u2064 especially\u2064 if <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/feds-daly-no-u-s-recession-needed-to-defeat-high-inflation\/\" title=\"Fed\u2019s Daly: no U.S. recession needed to defeat high inflation\">inflation stays high<\/a> and the Fed has to \u200braise rates further or\u200d keep\u200b them higher for\u2063 longer.<\/p>\n<h2 class=\"engaging-heading\">More Government \u2062Regulation<\/h2>\n<p>Mr. \u200cKashkari&#8217;s\u200d remark about imposing greater capital requirements on some banks\u2063 below the $100 billion \u200cthreshold came\u200c after he\u200b addressed the \u200bspectacular\u200c collapses\u2063 of Silicon Valley Bank and Signature Bank earlier this year.<\/p>\n<p>The \u200d<a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/fed-official-calls-for-significantly-tougher-bank-regulations-sending-shares-plunging\/\" title=\"Fed official demands stricter bank regulations, causing shares to plummet.\">twin bank \u200cfailures\u2064 triggered broader turbulence<\/a> within the banking\u2064 industry, hitting regional\u200d banks particularly \u200bhard in the\u200c form of \u2064<a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/bipartisan-bill-seeks-to-crack-down-on-big-banks-presence-of-federal-reserve-board\/\" title=\"New bill aims to limit big banks' influence on Federal Reserve Board.\">increased deposit outflows<\/a>.<\/p>\n<p>Discussing\u200c the causes of the collapses, Mr. Kashkari blamed a combination of <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/china-to-leapfrog-u-s-as-worlds-biggest-economy-by-2028-think-tank\/\" title=\"China to leapfrog U.S. as world\u2019s biggest economy by 2028 \u2013 think tank\">rising interest rates<\/a>,\u200c failure to manage risk properly, \u200dand U.S. banking regulators dropping the ball.<\/p>\n<p>The panel moderator then asked whether Mr. \u200bKashkari expects\u2062 more government regulation of the banking sector in\u2062 light of the \u2063failure\u2064 of supervision.<\/p>\n<p>&#8220;I do,&#8221; \u2063Mr. Kashkari replied, \u200cgiving as an\u2063 example\u2062 the recently proposed &#8220;Basel\u2063 III endgame&#8221; rules \u2062for increased bank capital\u200b requirements.<\/p>\n<p>&#8220;What does it mean, \u200ccapital requirements? This is the buffer that banks have to cover their losses. The more buffer they have, the safer they are but the\u200c more buffer\u2064 they \u2062have, the less profitable they\u200c are,&#8221; he \u200dsaid,\u2063 adding \u2062that \u200d&#8221;banks don&#8217;t like this.&#8221;<\/p>\n<p>Calling the proposal &#8220;thoughtful&#8221; and &#8220;very\u2063 positive,&#8221; Mr. Kashkari said \u200bthe proposed rules wouldn&#8217;t apply to community banks\u200c but mid-sized and \u200cbigger \u2063institutions, before adding that he&#8217;d like\u200d to see the rules apply to smaller institutions than the $100 billion asset cap. He did not specify what \u200dthreshold he\u2064 had in mind,\u200c however.<\/p>\n<p>Increasing capital requirements hurts bank profitability \u2063because the money that \u200dis set aside as a rainy-day buffer could otherwise be \u2064put to productive (and profitable) use\u2064 by, for example, making\u200b loans.<\/p>\n<h2 class=\"engaging-heading\">Bank Sector Stable But Flare-Ups Possible<\/h2>\n<p>Mr. Kashkari also said at Tuesday&#8217;s\u2062 town hall \u200din\u200b Minneapolis that the\u2062 Fed has made some progress in its inflation \u200dfight\u200d but interest rates might\u2062 still need \u2063to go higher\u2064 to finish the job.<\/p>\n<p>&#8220;I&#8217;m\u2064 not ready to say that we&#8217;re\u2064 done,&#8221; Mr. Kashkari said. At the same time, with inflation showing signs of slowing\u200c in recent months, he said, \u200c&#8221;I&#8217;m seeing positive signs\u2064 that \u200bsay, hey, we \u2062may \u2062be on our way. \u200cWe\u200c can take a little bit more time to get some more data and before we decide whether we \u2064need to do \u2063more.&#8221;<\/p>\n<p>The\u200c Fed has lifted \u200bits benchmark \u200cpolicy rate target by\u2063 5.25 percentage points since March 2022,\u200d the fastest pace of hiking since\u200d the 1980s.<\/p>\n<p>As \u200dthe\u2063 Fed \u200bfunds rate has been \u2062pushed rapidly to within a range of 5.25 percent to 5.00 percent, inflation has fallen<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>official urged for stricter regulations on regional banks, stating that the current proposal for increased capital requirements is insufficient. This led to a decline in the S&amp;P 500 banking index, reaching its lowest point in a month. The official made these remarks during a town hall event in Minnesota on August 15.<\/p>\n","protected":false},"author":118,"featured_media":2001892,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[543],"tags":[],"class_list":["post-2001891","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-the-epoch-times"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2001891","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/118"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2001891"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2001891\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2001892"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2001891"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2001891"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2001891"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}