December 21, 2015 / 8:34 PM / in 2 years

Fed proposes higher big bank capital thresholds when credit risk rises

(Reuters) - The Federal Reserve proposed on Monday that big banks would have to hold additional capital if regulators determine that U.S. credit risk has risen to above-normal levels and threatens the financial system.

Bollards help secure the entrance to the Federal Reserve in Washington, December 16, 2015. REUTERS/Kevin Lamarque

The proposal for what the Fed is calling a “countercyclical capital buffer” is designed to fortify banks against potential losses and “help moderate fluctuations in the supply of credit,” the U.S. central bank said in a press release.

The proposal, which is open for comment until Feb. 19, is the latest response by regulators to the 2008 financial crisis that battered the economy.

Reporting by David Henry; Editing by Chizu Nomiyama

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