WASHINGTON U.S. regulators on Tuesday proposed adding an additional buffer to a leverage ratio for the eight largest, globally active banks.
The Federal Deposit Insurance Corp.'s plan would increase the leverage ratio for bank holding companies that are deemed systemically important banks by the Basel Committee on Banking Supervision to 5%, while their insured subsidiaries would face a 6% leverage ratio. U.S. firms, which would be subject to a tougher leverage ratio, include Citigroup, JPMorgan Chase, Bank of America, and Goldman Sachs.
Each firm would have to meet the minimum leverage ratio of 3%, plus an additional buffer of 2%.
"Analysis by the agencies suggests that a three percent minimum supplementary leverage ratio would not have appreciably mitigated the growth in leverage among these organizations in the years preceding the recent crisis," Martin Gruenberg, chairman of the FDIC, said in a statement before a vote on the proposal. "Higher capital standards for these institutions would plane additional private capital at risk before calling upon the Deposit Insurance Fund and the federal government's resolution mechanism."
Citing persistent "too big to fail" concerns, FDIC officials said the proposed changes would help to build upon the interim final Basel III rule for the largest banks.
Currently, all eight banking companies meet the 3% supplemental leverage ratio requirement, but fall short of the higher requirement collectively by $63 billion. FDIC officials declined to say how many their insured banks would fall short.