The Fed scales back proposal for bank capital requirements
Published On Sep 10, 2024, 11:53 AM
The Federal Reserve has revised its proposal regarding capital requirements for banks, scaling back the initially suggested increases. The new plan proposes a 9% increase in capital levels for large banks like JPMorgan Chase and Bank of America, a significant reduction from the previous 19% increase. Smaller banks will also not face similar rigorous requirements, but they will still need to account for unrealized gains and losses in their capital calculations. These changes are largely a response to concerns that stricter requirements could lead to higher borrowing costs for consumers and businesses, potentially impacting overall economic activity. The proposal is now up for public comment.
Stock Forecasts
JPM
Positive
With the revised capital requirements expected to ease the financial burden on banks, the sector may see a boost in lending activities. This could lead to increased revenues and profits for major banks. Furthermore, the reduction in capital requirements may enhance investor sentiment toward bank stocks, driving their prices higher.
BAC
Positive
The scaling back of potential capital increases is likely to alleviate immediate concerns for Bank of America and its peers, creating a more favorable environment for lending and profitability in the medium term.
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