On Aug. 28, Fed issued individual capital requirements for large banks
Fed reported that it finalized individual capital requirements for all large banks.
The requirements follow Fed's stress testing performed earlier in 2024, see #217452.
Stress test results provide a risk-sensitive and forward-looking assessment of needs.
Requirements
The minimum capital requirement, which is the same for each bank, is 4.5 percent.
Stress capital buffer requirement, based on stress test results, is at least 2.5 percent.
If applicable, a capital surcharge for largest and most complex banks, is updated in the first quarter of each year to account for overall systemic risk of each of these banks.
If a bank's capital dips below its total requirement announced in this release, bank is subject to automatic restrictions on both capital distributions and discretionary bonus.
Modifications
Modified capital buffer for Goldman Sachs, after firm's request for reconsideration.
Based on an analysis of additional information presented by the firm in its request, the Board determined appropriate to adjust the treatment of particular historical expenses.
Current data collection used to support securities modeling was designed to capture more traditional hedges and does not consistently and comprehensively capture PLMs.
Considering additional data collections to better capture these portfolio hedges.
Effectiveness
The capital requirements come into effect on Oct. 1, 2024.
