Report: US Regulators Could Debut Banking Rules This Spring

The Federal Reserve and other American regulators could reportedly unveil new banking regulations this spring.

That’s according to the New York Times (NYT) report Tuesday (March 5) on the response to last year’s banking crisis. A source told the news outlet that at least some policymakers want to have a proposal released before a regulatory conference in June.

As the report noted, the new rules would be in addition to other proposed regulations that have already led to friction between America’s banking giants and financial rulemakers.

The aim of these new rules, the NYT said, would focus on liquidity to avoid the type of bank runs that led to the downfall of a number of regional banks in the spring of 2023.

As noted here last fall, two of the largest banks in the country — JP Morgan Chase & Co. and Citigroup — have said the proposed capital rules would impact credit availability and pricing for businesses and consumers, and would require banks to set aside more capital that could also affect their ability to engage in stock buybacks and investments.

And last week, JPMorgan CEO Jamie Dimon — head of the country’s largest bank — vented about the changes during a private gathering in Miami.

According to a recording heard by the NYT, Dimon said that “nothing” regulators had done since last year had helped fix the issues that caused the regional banking crisis last year. Dimon has also complained that the government’s capital rules target larger banks that were not part of last year’s collapse.

The Federal Reserve’s vice chair for supervision, Michael Barr, said last year that the proposed capital requirements would safeguard the financial system.

“The proposal is projected to raise capital for large banks,” Barr said. “This may result in higher funding costs. But this is only half the story. Capital also enables banks to absorb more losses without risking their ability to repay their creditors.”

Meanwhile, Jeremy Kress, a former Federal Reserve banking regulator who is now co-faculty director of the Center on Finance, Law & Policy at the University of Michigan, told the NYT that the fact that banks have been so vocal about the capital rules might give them less space to complain about the new regulations.

“There is a risk of the boy who cried wolf,” Kress said. “If they’re fighting every reform tooth and nail, their criticisms are going to start to lose credibility.”