Fed's top banking regulator supports new capital rules

By Ovunc Kutlu

ISTANBUL (AA) - The US Federal Reserve's top regulator on banking said Monday he supports newly proposed capital rules and requirements on banking institutions across the nation.

"Access to credit and other financial services is key to families navigating the many challenges they face and building a better future," Michael Barr said in a speech at the American Bankers Association Annual Convention in Nashville, Tennessee.

"But in order for the financial system to play this role, it must be able to weather unexpected stress and continue to serve its customers and communities. And this requires that banks have sufficient capital," he added.

Barr said private costs of capital must be weighed against social benefits of higher capital in order to create a healthier and more resilient financial system, in addition to the aim of reducing the likelihood of financial crises.

"Better capitalized banks are better able to absorb losses and continue to lend to households and businesses through times of stress, which in turn, helps to ensure that we have a healthy and strong economy," he added.

The proposed rules include banking institutions that have as little as $100 billion in assets.