FDIC Says Tougher Rules Coming for Banks Over $100B in Size

The head of the Federal Deposit Insurance Corporation said Thursday that bank regulators are considering applying a future set of stricter capital rules to banks with more than $100 billion in assets.

FDIC Chairman Martin Gruenberg said in a speech to The spring chaos in the banking sector shows that companies of such size pose a risk to the financial system and deserve stricter supervision. Qthree banks failed during the spring, requiring regulators to step in and backstop deposits.

“If we have any doubts about that the failure of banks in this size category may have consequences on financial stability, which has been addressed by recent experience,” he said in prepared statements. “The lesson to be drawn is that banks in this size category can pose a real risk to financial stability.”

she more agencies will propose new capital rules to implement an international agreement on banking regulation in the near future, but will likely not complete the rules before mid-2024.

Qhe so-called Basel III “end of the game” rules are already one focus on severe criticism in the banking industry, arguing with regulators and lawmakers that overly strict requirements could hamper banks and the broader economy.

But Gruenberg argues that it is critical, especially after the spring bank failuresfor regulators to get stricter rules in place.

“A strong regulatory capital framework is the basis of a strong banking system,” he said, adding that the upcoming proposal “offers us the opportunity to make important changes or to a risk-based regulatory framework with the ultimate goal of improving the financial stability and stability of the banking system, making it better able to serve the US economy.”