| Fed issues draft Dodd-Frank big bank rules and Fed Nod to PNC-RBC Deal |
| News - Financial News |
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WASHINGTON (MarketWatch) - The Federal Reserve on Tuesday released a package of post-crisis proposals detailing new tougher rules for big banks, including a measure that would limit a large financial institution's credit exposure to other large banks. The central bank said it would implement an aspect of a global agreement on bank capital, known as Basel III, named after the city in Switzerland where past agreements have been formed. However, the central bank said it would release a proposal later providing the details of how it would do so. The agency proposed new stringent rules on transactions between big banks, exposing them to possible leverage prohibitions and sets forth a series of new punishments for violators. The regulations would impact the largest U.S. banks including Bank of America Corp. , Citigroup Inc. and J.P. Morgan Chase & Co. . [Read the full article] New regulations will require bank directors to approve liquidity risk, as the Fed seeks to avert the collapse of "systemically important" institutions. [Read the full article] The Fed also adopted rules for smaller banks with over $10 billion in assets. These banks will have to undergo stress tests conducted by their regulators to ensure that they are adequately prepared for an economic downturn. Most U.S. banks oppose these stricter rules. They have argued that holding too much extra cash would hamper their ability to make loans. One of the lead advocates against the rules was Jamie Dimon, CEO of JPMorgan Chase. In June, Dimon pressed Federal Reserve Chairman Ben Bernanke in a public forum asking if regulators had gone too far and might be slowing down the economic recovery. In September, Dimon called the Basel rules "anti-American." However, the Fed said that the benefits to society from a stronger banking system outweighs the short term effects on credit availability or credit costs from these new rules. [Read the full article] 
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