Fed plans to boost US banks' reserve requirements; industry gripes

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The Federal Reserve's top regulatory official laid out a sweeping plan to increase capital requirements for the nation's largest banks in the wake of recent bank failures, a move that was immediately met with criticism from the industry.

In a widely-anticipated speech, Fed Vice Chair for Supervision Michael Barr said he planned to pursue multiple regulatory initiatives that would direct larger banks with more than $100 billion in assets to hold more in reserve, saying the recent bank failures underlined the need for regulators to bolster resilience in the system.

Barr had been expected to prescribe tighter rules on the sector since being tapped by President Joe Biden to serve as the Fed's bank watchdog. But Monday's remarks marked the most detailed view yet of his agenda, and confirmed industry fears he would pursue a broad set of tighter requirements and also ignore their pleas for relief in some areas.

Barr said he did not plan to overhaul the U.S. bank capital framework, but instead build on it in several ways, including by fully implementing the globally agreed Basel bank capital agreement and expanding annual "stress tests" of banks' health. He did not offer a specific timeline for any changes, but the effort isBarr's speech served as a comprehensive update on a "holistic" review of bank capital rules that he launched shortly after joining the U.S.

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