WASHINGTON The Federal Reserve Board is scheduled to meet next week to vote on a tougher leverage ratio for the country's eight largest U.S. banks, the agency announced Tuesday.
The board is scheduled to hold an open meeting to review a final supplementary leverage ratio that will affect firms like JPMorgan Chase & Co., Citigroup Inc. and Bank of America.
U.S. regulators last summer issued a proposal that would require the biggest bank holding companies to comply with a 5% leverage ratio, while their insured depositories must meet a 6% ratio.
Regulators agreed to tack on additional requirements at the behest of officials at the Federal Deposit Insurance Corp, who argued that the originally proposed supplemental minimum threshold of 3% was insufficient given the magnitude of problems during the financial crisis.
Collectively, banks would have to shore up an additional $89 billion in capital to meet the higher leverage requirement if it is finalized as proposed, while their insured subsidiaries will have to fill a shortfall of $63 billion.
In its meeting notice Tuesday, the Fed also announced plans to take up two other separate proposals. One would change the definition of the total leverage exposure and how the ratio is ultimately calculated. A second plan would revise the definition of eligible guarantee under the banking agencies' advanced approaches risk-based capital rules.
Observers have been waiting to see whether the three banking agencies would make any changes to their proposal given the significant revisions the Basel Committee on Banking Supervision made in January on a global leverage standard.
The Basel Committee enacted several concessions to the world's biggest banks by changing how financial institutions treat derivatives, cleared transactions, and repurchase agreements. Such modifications would impact a key part of the leverage ratio calculation: the denominator of certain bank exposures.
It had been expected that U.S. regulators would have to issue a separate proposal that would modify the final Basel III rules agreed upon in July to reflect changes in the global leverage rule.
At a hearing in February, top officials at all three banking agencies assured lawmakers the importance of moving forward with a final rule, while also hinting at their own considerations in how to apply the rule to U.S. banks.
"We know where they've come out," said Fed Gov. Daniel Tarullo. "The question remains, what's the required minimum ratio going to be, given all that work. It's the intention of the three bank regulatory agencies to have a higher minimum ratio than that prevails in the international forum right now."