{"id":2018440,"date":"2023-08-31T17:28:01","date_gmt":"2023-08-31T21:28:01","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/fdic-plans-to-impose-higher-capital-requirements-on-regional-banks\/"},"modified":"2023-08-31T17:31:45","modified_gmt":"2023-08-31T21:31:45","slug":"fdic-plans-to-impose-higher-capital-requirements-on-regional-banks","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/fdic-plans-to-impose-higher-capital-requirements-on-regional-banks\/","title":{"rendered":"FDIC to enforce stricter capital rules on regional banks."},"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\">18<\/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%2Ffdic-plans-to-impose-higher-capital-requirements-on-regional-banks%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=2018440&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>Federal regulators have proposed new\u200b regulations that would\u200d impose higher capital requirements on regional banks.<\/p>\n<p>The \u200bFederal Deposit Insurance Corporation (FDIC) is taking action to prevent another banking crisis like the \u2062one that occurred earlier this year when four mid-sized lenders failed.<\/p>\n<p>The smaller banks will be required to issue debt and establish &#8220;living wills&#8221; to protect the public in case of\u200c future failures, according to an FDIC press release on Aug 29.<\/p>\n<div class=\"shortcode\">\n<div class=\"border-comp-divider mb-4 mr-4 w-full max-w-[500px] border 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 Stories<\/div>\n<div class=\"mb-4 flex gap-2\">\n<div class=\"grow\">\n<div class=\"mb-1 line-clamp-2\">\n            <a href=\"http:\/\/www.theepochtimes.com\/article\/big-banks-to-pay-billions-more-in-fdic-fees-after-bank-failures-5263401\">Big Banks to Pay Billions More \u200din FDIC Fees After Bank Failures<\/a>\n          <\/div>\n<div class=\"text-comp-caption text-[14px] leading-[18px]\">5\/14\/2023<\/div>\n<\/p><\/div>\n<div class=\"shrink-0 basis-[120px]\">\n          <a href=\"http:\/\/www.theepochtimes.com\/article\/big-banks-to-pay-billions-more-in-fdic-fees-after-bank-failures-5263401\"><\/a>\n        <\/div>\n<\/p><\/div>\n<div class=\"mb-4 flex gap-2\">\n<div class=\"grow\">\n<div class=\"mb-1 line-clamp-2\">\n            <a href=\"http:\/\/www.theepochtimes.com\/article\/sp-downgrades-five-us-banks-citing-tough-operating-conditions-5478339\">S&#038;P Downgrades Five US Banks, Citing &#8216;Tough&#8217; Operating Conditions<\/a>\n          <\/div>\n<div class=\"text-comp-caption text-[14px] leading-[18px]\">8\/22\/2023<\/div>\n<\/p><\/div>\n<div class=\"shrink-0 basis-[120px]\">\n          <a href=\"http:\/\/www.theepochtimes.com\/article\/sp-downgrades-five-us-banks-citing-tough-operating-conditions-5478339\"><\/a>\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>This measure would make \u200dit easier\u200d for the FDIC to unwind the operations of these banks in the future.<\/p>\n<h2>Regional Lenders Ordered\u2064 to Raise \u2062Capital Debt Cushion<\/h2>\n<p>Smaller lenders will now be required to\u200d hold at \u2063least $100 billion in assets to issue enough <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/russia-on-verge-of-150-billion-debt-default\/\" title=\"Russia on Verge of 0 Billion Debt Default\">long-term debt<\/a> and absorb losses in case of \u2064a potential government\u200d seizure.\u200b This joint notice from \u200bthe Treasury Department, Office of the Comptroller of the Currency, the Federal \u2064Reserve, and the FDIC outlines the new requirements.<\/p>\n<p>Impacted banks will also have to <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/fdic-plans-to-impose-higher-capital-requirements-on-regional-banks\/\" title=\"FDIC to enforce stricter capital rules on regional banks.\">maintain long-term debt levels equal<\/a>\u200b to\u2064 3.5 percent of average total assets or 6 percent of risk-weighted assets, whichever is higher.<\/p>\n<p>According \u200dto Michael J. Hsu, \u2064acting U.S. comptroller of\u200b the currency, regional lenders lack the necessary long-term debt\u2064 and prepared data rooms that larger banks have. This left the government with limited options to prevent financial \u200bchaos when Silicon Valley Bank, Signature Bank, and First Republic failed.<\/p>\n<p>Mr. Hsu\u200d is calling for long-term debt and separability\/data \u2064room requirements to be extended to all banks with $100 billion or more in assets. This\u200c would have made their failures less chaotic if they had\u200b enough capital that was separable.<\/p>\n<p>He\u2063 believes that loss-absorbing capital and long-term debt requirements would have ensured that the majority of losses were borne by the\u2064 bank&#8217;s investors, rather than the\u200c FDIC&#8217;s <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/government-steps-in-with-plan-to-protect-all-deposits-at-silicon-valley-bank\/\" title=\"Government Steps In With Plan to Protect All Deposits at Silicon Valley Bank\">deposit insurance fund<\/a>. This would have\u200c facilitated \u200ca quick and systematic breakup, minimizing uncertainty for the <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/zelensky-claims-russians-are-usually-constructing-torture-chambers-in-occupied-south\/\" title=\"Zelensky Claims Russians Are usually Constructing 'Torture Chambers' In Occupied South\">entire banking sector<\/a>.<\/p>\n<h2>Regulators Aim to Prevent Future Bank Failures<\/h2>\n<p>These proposed changes were drafted after the FDIC pledged in March\u2064 to cover all uninsured depositors \u200cat Silicon Valley Bank and Signature Bank, as their collapse posed significant risks to the\u200b U.S. financial system.<\/p>\n<p>First \u200dRepublic Bank, another regional lender, was sold to JPMorgan Chase \u200bfollowing\u200b its seizure in May.<\/p>\n<p>These actions by the FDIC are estimated to cost its\u2064 Deposit Insurance Fund over $30 billion.<\/p>\n<p>The nation&#8217;s largest banks will absorb \u200dthese costs through special assessments paid to the FDIC.<\/p>\n<p>The regional banking crisis\u200c also affected the earnings of other lenders, as depositors withdrew their \u2064funds in the first quarter.<\/p>\n<p>Regulators\u200d released their first outline\u2064 of expected changes last month, proposing to <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-banks-push-back-as-regulators-prepare-international-capital-hikes\/\" title=\"US banks resist as regulators plan global capital increases.\">raise capital requirements<\/a> for banks with $100 billion or more\u200c in assets \u200band standardize risk models for the industry\u2064 to avoid further disasters.<\/p>\n<p>The larger financial institutions may have to raise \u200ccapital by as much \u200das 19 percent, while smaller banks with $100\u2013250 million in assets would see an average increase of 5 percent.<\/p>\n<p>Regulators are accepting comments on these proposals until the end \u200cof November, following criticism from\u200b the industry after the rules \u200bwere published in late\u200d July.<\/p>\n<h2>Banking Industry Protests \u200bProposed Rule Changes<\/h2>\n<p>FDIC Chair Martin Gruenberg stated that the\u200d new \u200drequirements would \u200b&#8221;marginally increase funding costs&#8221; and could reduce \u200ba key measure of bank \u200cprofitability by approximately three basis points.<\/p>\n<p>Mr. Gruenberg emphasized \u2064the need for meaningful\u2062 action to improve the likelihood\u2062 of an orderly resolution\u200b of large\u2063 banks, citing the experience of the three \u2062large bank \u200cfailures earlier this year. He noted that these banks had\u200d disproportionately large amounts of uninsured deposits, which contributed significantly\u200b to their failures.<\/p>\n<p>However, adding more long-term debt to regional bank\u2062 balance sheets may create additional pressure for the industry, especially after the\u2064 downgrades of dozens of lenders \u200dby credit ratings agencies this year.<\/p>\n<p>Financial institu<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Federal regulators aim to enforce stricter capital requirements on regional banks to prevent future crises. The FDIC plans to address the failures of four mid-sized lenders by mandating smaller banks to issue debt and establish &#8220;living wills.&#8221; These measures aim to enhance stability within the banking sector.<\/p>\n","protected":false},"author":327,"featured_media":2018441,"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-2018440","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\/2018440","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\/327"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2018440"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2018440\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2018441"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2018440"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2018440"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2018440"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}