Federal Regulators Propose Large U.S. Banks Set Aside More Capital

Federal regulators are proposing that the eight largest U.S. banks be required to further increase the amount of capital they set aside to cushion against unexpected losses. The proposed requirements are aimed at lessening the chances of future taxpayer bailouts of troubled banks, while also encouraging the behemoths to shrink, so they pose less of a risk to the financial system. The Federal Reserve governors were to vote at a meeting Tuesday to advance the so-called 'capital surcharges.' They would increase in proportion to how risky the regulators deem a bank to be. As a result, the banks will have an incentive to get smaller to avoid having to set aside more capital. The eight banks, considered so big and interconnected that each could threaten the financial system if they collapsed, are JPMorgan Chase, Citigroup, Bank of America, Goldman Sachs, Wells Fargo, Morgan Stanley, Bank of New York Mellon and State Street Bank.