Fed Chair Powell says smaller banks likely will be exempt from higher capital requirements

cnbc.com:

New rules expected to require that banks keep more capital almost certainly won't apply to smaller institutions, Federal Reserve Chairman Jerome Powell said Thursday.

Addressing concerns over proposals to tighten the reins on bigger banks, Powell told members of the Senate Banking Committee that the rules are still in draft stage.

At the same time, he also raised concerns about what impact higher capital requirements would have on lending.

«More capital means more stable banks and stronger banks, but there's also a trade-off there,» he said in the second day of his semiannual testimony on monetary policy. «You've got to make a judgment about where you draw that line.»

In Powell's understanding, banks below $100 billion in assets won't be impacted by any new requirements. That provided some relief for Republican lawmakers who questioned whether the changes were necessary, as Powell faced multiple questions about the future of regulation and supervision. If that's the case, the new rules would impact the top 25 or so banks in the U.S.

The questions, and the move to re-examine regulations, follow the March tumult in the industry, in which Silicon Valley Bank and two other large regionals were shuttered following deposit runs.

Lawmakers and Biden administration regulators have been pushing for a return to more stringent requirements after larger regionals were given a break in changes made in 2018.

In separate testimony Thursday, FDIC Chair Martin Gruenberg said the upcoming rules could apply so-called Basel III international standards to banks in the $100 billion to $250 billion asset range. The changes are not expected to be applied until sometime in 2024. Michael Barr, the Fed's vice chair for supervision, has said they