On July 9, more stringent capital requirements were proposed for the largest U.S. banks by the the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Federal Reserve.
This happens as these government agencies are working toward finalizing the nation's interpretation of the Basel III capital requirements in an effort to create an environment that helps to more effectively manage the risk associated with the nation's banking sector. In addition, these government regulators need to determine a timeline for implementing the guidelines set forth by the Basel Committee.
The requirements that were proposed by the Federal Reserve, the FDIC and the OCC on July 9 affect the eight largest lending institutions in the United States, and these entities now have 60 days to provide their input on the proposals, according to The New York Times.
Industry opposition to higher capital requirements has already been significant, as these market participants have provided a wide range of objections including concerns about facing a shortage of the high-quality capital needed to fulfill the requirements, as well as how meeting guidelines such as Basel III could potentially impact lending activity.
◦ Asset Liability Management
◦ Portfolio Risk
◦ Sensitivities & Hedging
◦ Stress Testing & Scenario Analysis