Fed proposes higher big bank capital thresholds when credit risk rises

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

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 US 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.

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