This story appeared in Bank Digest.
The Federal Reserve Board is proposing to simplify its capital rules for large banks while preserving strong capital levels that would maintain the banks' ability to lend to households and businesses under stressful conditions. According to the Fed's press release, the proposal would introduce a "stress capital buffer" (or SCB) that would in part integrate the forward-looking stress test results with the Fed's non-stress capital requirements to produce capital requirements for large banking organization that are firm-specific and risk-sensitive.
The Fed estimates that, relative to current requirements, the proposed changes would generally maintain or somewhat increase the amount of capital required for global systemically important banks and generally decrease modestly the amount of capital required for most non-GSIBs.
The proposal would also modify several assumptions in the Comprehensive Capital Analysis and Review process to better align them with a firm's expected actions under stress. Comments on the proposed rule must be received within 60 days of its publication in the Federal Register.