Banks have floated a proposal to federal regulators on how to pay for a restructuring of the nation's largest financial institutions in the event of a future crisis, the Wall Street Journal reported today. The plan, given to the U.S. Federal Reserve at a private meeting May 22, is an effort by banks to preempt tougher rules from officials in Washington, D.C., who believe banks still could pose a threat to financial stability in a crisis. Officials from Wells Fargo & Co., Bank of America Corp., Citigroup Inc. and several other banks attended the meeting with the Fed, along with banking trade group the Clearing House. Under the proposal, the largest financial-services holding companies would be willing to hold a certain amount of debt and equity that would be used to prop up any failed bank subsidiary seized by regulators. Some banks might be forced to issue expensive long-term debt. The plan is a concession to regulators, who increasingly have been calling for banks to hold a minimum amount of long-term debt. (Subscription required.)
http://online.wsj.com/article/SB100014241278873233000045785554636497469…
In related news, U.S. regulators are considering doubling a minimum capital requirement for the largest banks, which could force some of them to halt dividend payments, Bloomberg News reported on Friday. The standard would increase the amount of capital the lenders must hold to 6 percent of total assets, twice the level set by global banking supervisors. Five of the six largest U.S. lenders, including JPMorgan Chase & Co., would fall below the 6 percent level, according to estimates by investment bank Keefe, Bruyette & Woods Inc. U.S. regulators last year proposed implementing the 3 percent international requirement for what’s known as the simple leverage ratio. Now the Federal Reserve and Federal Deposit Insurance Corp., under pressure from lawmakers, are weighing increasing that figure for some of the biggest banks.
http://www.bloomberg.com/news/2013-06-21/u-s-weighs-doubling-leverage-s…