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Federal Reserve Board officials have pledged not to force big banks to meet Basel III standards early, but have simultaneously warned institutions that they cannot pay dividends until they do so.
November 9 -
International regulators named eight U.S. firms as globally significant institutions, subjecting them to a capital surcharge that will take effect in 2016. But the exact size of the charge, including differences among those institutions, was left unclear for at least another year.
November 4 -
The largest U.S. banks are quietly preparing to push back against proposed Basel III liquidity requirements that they argue could wreak havoc in the market by artificially deflating the value of certain assets.
June 1 -
Bank executives are sounding considerably less positive about Basel III than they did when global regulators announced final international capital and liquidity standards last year.
April 26
WASHINGTON — U.S. regulators are keeping their vow to outfit the largest banks with rules under Basel III.
On Wednesday, the Federal Reserve Board announced the seven-member Board of Governors will hold a public meeting on June 7 to vote on a set of proposed rules to impart higher capital, liquidity and leverage requirements on the biggest, most complex banks in the U.S.
Senior Fed officials have repeatedly said they would move ahead with the non-binding accord, which was devised to respond to the most recent financial crisis.
Under the international agreement, which has been signed off by 27 countries, firms will be required to hold at least a 4.5% common equity ratio by 2015 and phase in a capital conservation buffer of 2.5% by January 2019.
Considered to be one of the most controversial parts of the plan is an additional capital surcharge that the world's most systemically important financial institutions will have to hold.
Banks were staunchly opposed to the extra capital buffer, but regulators insisted it was necessary to ensure a proper safety net.
In November, global regulators identified 29 banks, including Bank of America, JPMorgan Chase and Citigroup, that would be subject to the surcharge. An institution could be placed into any of the four capital buckets to hold additional capital of 1%, 1.5%, 2%, or 2.5%.
Regulators, however, postponed specifying how much each firm would have to hold until November. That surcharge won't be phased in until 2016.
The plan also calls for banks to develop a liquidity coverage ratio, or LCR, that is designed to meet short-term liquidity needs typically in a 30-day period. Regulators also require a net stable funding ratio for longer-term needs. The first ratio is scheduled to take effect in 2015 and the second in 2018.
Still, regulators are hoping to work out problems with the liquidity rule in 2012.
For now, the Fed has said banks can rely on internal modeling in their own stress tests to ensure proper liquidity rather than forcing compliance with the Basel III proposal.
Separately, the Board will vote at the meeting on a proposal for capital requirements for savings and loan holding companies and a final interagency rule on market risk capital.
