Bank Capital Standards

Peter Van Doren

The Federal Reserve Bank recently proposed to liberalize capital standards for large banks. Since 2014, the eight largest banks have had to maintain capital that was at least 5 percent of their total assets. The change would reduce that ratio to a range of 3.5 percent to 4.5 percent, a reduction in capital requirements of $13 billion, or 1.4 percent at the holding company level.

After financial crises and bank failures, capital standards are always increased. As memories of the last crisis fade...