FORTUNE -- Banks will have to come up with more money to prove to regulators they're safe. Others may still not be convinced.
U.S. bank regulators on Tuesday officially upped the amount of excess assets the nation's eight largest banks must hold to cover potentially bad loans or soured investments. In a memo, the Federal Reserve estimated that the new rule would force the banks to raise $68 billion by the end of 2017, when the rule would go into place. The rule was jointly approved by the Federal Reserve, the FDIC, and the Office of the Comptroller of the Currency.
The Fed specifically cited "too big to fail" as one of the reason it thought the largest banks should be required to hold more capital. The Fed has recently released a number of studies that suggest the largest banks in the U.S. get an unfair advantage, though not as large as some think.
Regulators have been tinkering with bank capital requirements for the past few years, and they have already set the amount of money that banks have to hold to cover potential losses from their riskier loans and investments. The new rule sets the so-called leverage ratio at 5% of all banks' loans and investments, which is less than the ratio of excess assets banks must hold against their riskiest loans.
International rules require large banks to have a leverage ratio of 3%. So the U.S.'s new 5% rule is stricter. But it's down from the 6% that regulators were considering a year ago. And it's still far less than the 15% that some bank critics have called for.
And while $68 billion is a lot of money, the nation's eight largest banks, which includes JPMorgan Chase (JPM), Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC), shouldn't have a hard time coming up with the funds. Collectively the banks, which also include Goldman Sachs (GS), Morgan Stanley (MS), Bank of New York (BK), and State Street (STT) earned just over $80 billion last year. Repeat that performance, and $68 billion is roughly a quarter of what the big banks will earn by the time the rule goes into effect.
The reality is U.S. companies across all industries may be 'too big to fail,' not just Wall Street banks.
By Sanjay Sanghoee
FORTUNE -- The U.S. Federal Reserve recently concluded that six of America's biggest banks enjoy about $8.5 billion a year in savings, mostly in the form of paying lower borrowing costs than smaller institutions. That might sound unfair, but that's a pretty small price U.S. taxpayers effectively pay to avoid another MOREMar 31, 2014 2:23 PM ET
That figure is smaller than what similar studies have found. There's also been a big jump in the shadow banking system, which, if you're worried about large banks, is good news.
FORTUNE -- The Federal Reserve finally got around to stating the obvious.
On Tuesday, the New York Fed, through a series of research papers, said the nation's largest banks borrow more cheaply, and take on more risks, than smaller banks and MOREStephen Gandel, senior editor - Mar 26, 2014 10:56 AM ET
The largest asset managers should become simpler, smaller and less interconnected.
By Sheila Bair
FORTUNE -- Hark. Do you hear it? That sound of ringing bells coming from the nation's capital as we enter the holiday season? Is it Salvation Army Santas taking to the street corners? Church campaniles playing "Carol of the Bells?" Or maybe angels getting their wings a la the Christmas classic It's a Wonderful Life?
Nope. It's the MOREDec 4, 2013 12:41 PM ET
Two new studies find preferential treatment for banks with political ties to the Treasury Department.
FORTUNE -- Move over "too big." There's a new knock on the mega banks: "Too connected to fail."
Two studies published in the past few weeks tackle the issue of whether big banks get special privileges because of their connections to top regulators and Washington officials.
Both studies focus on the early days of the financial crisis. The MOREStephen Gandel, senior editor - Oct 28, 2013 5:00 AM ET
Assets at the six largest U.S. banks are up 37% from five years ago. What happened?
FORTUNE -- One third of all business loans this year were made by Bank of America. Wells Fargo funds nearly a quarter of all mortgage loans. And held in the vaults of JPMorgan Chase is $1.3 trillion, which is 12% of our collective cash, including the payrolls of many thousands of companies, or enough to MOREStephen Gandel, senior editor - Sep 13, 2013 11:42 AM ET
The regulations meant to strengthen our big banks may be leaving the U.S. with more troubled small banks.
FORTUNE -- The number of banks in danger of failing is the lowest since the beginning of the financial crisis. That sounds like good news, until you consider this: There are still 11 times more problem banks in the U.S. than there were back in early 2007, before the financial crisis. And the MOREStephen Gandel, senior editor - May 31, 2013 5:00 AM ET
Consultant calls recently proposed banking regulations "weapons of mass destruction."
FORTUNE -- Call it too big to succeed.
A report about the global banking industry by Boston Consulting Group, which was released on Tuesday, says new regulations and less business will force the big banks to dramatically shrink. Of the 28 global banks the consulting firm looked at, only a few of the leading players like -- Goldman Sachs (GS), Deutsche Bank MOREStephen Gandel, senior editor - Apr 30, 2013 2:13 PM ET
A small Fed tax will do little to rein in big banks.
FORTUNE -- For the big banks, the Federal Reserve's stick remains pretty rubbery.
When Dodd-Frank, the banking reform law passed in the wake of the financial crisis, was originally envisioned, co-author Congressman Barney Frank, members of the Obama administration, and others believed the new rules would encourage banks to shrink by making it too expensive to remain big. That, they MOREStephen Gandel, senior editor - Apr 16, 2013 5:00 AM ET
Jamie Dimon needs to take a cue from J.P. Morgan's trading debacle and divide the banking giant into manageable pieces.
By Sheila Bair, contributor
FORTUNE – When I was a child, my sister and I loved watching the goings-on at a chicken farm near my grandmother's house in rural Kansas. Chickens are interesting social animals, resembling, somewhat, the way we in Washington interact with one another. They were always on the MOREMay 25, 2012 5:00 AM ET
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