The Fed has already eased certain capital requirements in response to the coronavirus pandemic. It should avoid making any further adjustments to the surcharge, which is meant to keep global banks from creating systemic risks.
In separate letters to Congress, the Fed asked for legislative action to ease Tier 1 capital minimums while the FDIC said it may use its own authority to address the market strain on banks.
Under the plan, large banks would have to hold additional capital if they purchase another bank's "loss-absorbing" debt that is used to contain fallout from a collapse.
The Federal Reserve’s top regulator, who assumed the chairmanship of the international board in November, said the FSB should explain the rationale behind its financial benchmarks while establishing new ones to combat emerging threats.
While much of the debate of the past decade has focused on the Dodd-Frank Act, changes to Basel capital standards have played a big role in adding to the regulatory burden.
