Larger banks need higher capital requirements, says Fed’s Barr

Changes could take years, vice-chair says, and “we need to worry, a lot, about non-bank risks”

Michael Barr speaks at the Peterson Institute
Michael Barr

Higher risk-based capital requirements should be applied to banks with over $100 billion in assets, said Federal Reserve vice-chair for supervision Michael Barr.

In a speech on July 10, Barr said regulation should focus on resilience. He pointed to equity capital as being “well suited to building resilience”. High capital requirements, he said, will spur managers and shareholders to manage risk more prudently.

“A threshold of $100 billion would subject more banks to our most risk-sensitive

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