Fed approves new rules for big banks, more to come

Jul 02, 2013, 6:23 PM EDT
raders work on the floor of the New York Stock Exchange just after an anticipated Federal Reserve announcement during afternoon trading on June 19, 2013 in New York City.

The Federal Reserve Board approved a final rule to help ensure banks maintain strong capital positions, part o the Basel III accord, a global agreement that was reached among regulators to shield capital after the 2008 financial crisis. The new framework "requires banking organizations to hold more and higher quality capital, which acts as a financial cushion to absorb losses, while reducing the incentive for firms to take excessive risks," its Chairman Ben Bernanke said. The Fed also warned to expect a new draft of regulations to force the largest banks to sacrifice profits in the name of safety. Bloomberg reports that lenders will be forced to maintain a ratio of capital to assets that exceeds the 3% floor set by the Basel Committee on Banking Supervision, according to the Federal Reserve Governor Daniel Tarullo. Another measure would compel banks to hold a minimum amount of equity and long-term debt to help authorities dismantle failing lenders, Tarullo said.