OPINION

Fed May Review Capital for More Banks

Townhall Staff
Townhall Staff  |  Jun 10, 2011
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The Federal Reserve may expand its annual review of bank capital beyond the 19 largest financial institutions to push rigorous risk-management standards into more banks, according to people familiar with the discussions.

Firms with assets of $50 billion or more would be required to conduct an exam, with boards showing Fed examiners how stock buybacks, dividends, earnings, and new regulations affect capital over several years, said the people, who declined to be identified because the proposal isn’t final. The Fed completed its first annual study of capital plans in March, clearing the way for firms such as Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM) to boost dividends.

Bankers, including JPMorgan Chase Chief Executive Officer Jamie Dimon, have criticized stricter federal oversight of the biggest firms, saying new regulations may impair lending and economic growth. Some investors welcome the tougher supervision, which the Fed is imposing in compliance with the Dodd-Frank Act, passed last July.