FDIC Proposes New Capital Reserve Levels
The Frank-Dodd Bank Reform Act’s impact continued in December as the FDIC proposed new standards that will require the nation’s largest financial institutions to maintain minimal capital reserves similar to that required by smaller financial institutions.
Under the new standards, insured banks must determine their capital reserve cushions under formulas used by both large and small banks alike. After comparing the results of the formulas, the large banks will now be required to follow the formula with the more stringent result.
In the wake of the financial crisis commenced in 2008, many commentators suggested part of the problem leading to the crisis was that larger institutions were able to abide by their own models for maintaining capital reserves. This proposed new standard is subject to a ninety day comment period.
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William T. Repasky practices with the Litigation Department at Frost Brown Todd. He focuses on lending and commercial services; banking litigation and financial institutions.