Bank Capital Rules: Federal Reserve Board Governor Tarullo Previews Rulemakings that Will Establish More Rigorous Capital Requirements for Largest U.S. Banking Organizations

Sullivan & Cromwell LLP - July 3, 2013

In introducing the new, Basel III-based capital regulations of the Board of Governors of the Federal Reserve System (the “Board”) at yesterday’s open meeting of the Board approving those regulations, Board Governor Daniel Tarullo previewed an extensive, and potentially much more rigorous, set of capital requirements for the eight U.S. banking organizations already identified as of global systemic importance and potentially also for a broader group of large U.S. banking organizations. These additional capital requirements, when combined with Basel III and the Board’s stress test program, could refocus attention on the issue of the point at which the totality of these capital requirements could begin discouraging credit extension and significantly increasing the cost of capital.