The Federal Reserve on Tuesday was set to vote to approve a proposal to implement a global agreement on bank capital buffers known as Basel III, including a measure that would establish limits on a big bank's capital distributions and bonus payments if the institution doesn't have certain common equity buffers in place
The rules, implemented in response to the financial crisis of 2008, are a critical step to ensure large institutions are sufficiently cushioned against future financial shocks
However, regulators decided to provide big banks with relief from a provision that would have required large institutions to give higher risk weighting to certain types of subprime and other mortgages
"With these revisions to our capital rules, banking organizations will be better able to withstand periods of financial stress, thus contributing to the overall health of the U.S. economy," said Fed chairman Ben Bernanke in a statement
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NEW YORK (MarketWatch) -- The majority of U.S. banks will be able to meet the tougher capital requirements set by regulators, which are positive for financial stability, according to a statement by Fitch Ratings on Friday. Most banks are well positioned to either meet or exceed the requirements set out by the Federal Reserve to meet the Basel III rules, said Fitch. The rules create a two-tier banking system, with the bigger banks facing the most stringent rules, while giving smaller banks some concessions. Small banks will not be required to apply unrealized gains and losses to common equity Tier 1 capital. The Fed approved final rules on July 2 and the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) are expected to approve the rule in upcoming board meetings. Implementation of the rules will start January 2014 for most banks and 2015 for smaller banks.
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