WASHINGTON (AP) — The Federal Reserve wants a broader group of banks to provide details each year about their finances, part of an effort to ensure banks can meet their capital requirements and avoid another financial crisis.
The Fed currently requires the nation's 19 largest banks to submit capital plans annually. The proposal unveiled Friday would expand the list to the 35 largest banks by requiring firms with assets of $50 billion or more to submit annual plans.
Capital is the amount of reserves that a bank holds as a cushion against losses. If the Fed determines a bank doesn't have adequate capital, it can order it to stop paying dividends to stockholders. The central bank is taking comments on the proposal through August and has plans to implement it by January.
The financial overhaul law passed last year directed federal regulators to do a better job monitoring the level of capital that banks keep on hand. Banks have been fighting many of the more stringent controls being imposed under last year's legislation. They contend the tighter rules are not necessary and will restrict their ability to make loans.
In testimony to Congress in May, Federal Reserve Chairman Ben Bernanke said the Fed plans to unveil new regulations this summer to implement various parts of last year's overhaul law.
Those rules will require big banks and other financial institutions such as hedge funds and insurance companies to be subject to more strict requirements if their failure could endanger the entire economy. Those rules governing institutions judged to be systemically important are also scheduled to go into effect in January.