The head of the U.S. Securities and Financial Markets Association (SIFMA) has expressed disappointment with a new rule published Monday by the U.S. Federal Reserve Board that sets out added capital requirements for large, systemically important U.S. banks.
See: Fed directs eight biggest U.S. banks to hold extra capital
SIFMA’s president and CEO, Kenneth Bentsen Jr., expressed his concerns with the final rule in a letter to the Fed.
“Upon first review, we are disappointed that the final rule does not sufficiently address a number of concerns expressed in our comment letter and therefore is likely to unnecessarily constrict the ability of financial institutions to lend, facilitate capital formation and drive economic growth,” he says in the letter.
The Fed did tweak the rule’s calculation methodology, Bentsen notes, yet “questions remain regarding the fundamental analysis that underpins this rule.” Bentsen calls on the Fed to fully disclose its underlying methodology for the added capital requirements.
Additionally, the rule “does not appropriately recognize the tremendous amount of change that has already occurred at financial institutions to meaningfully reduce systemic risk,” Bentsen argues.
“The industry has fundamentally reshaped itself into one that is safer, sounder, and more resilient, with increased capital and liquidity buffers, new resolution regimes and new clearing and margin mandates, among other changes. Moving forward, it is important for regulators to consider the cumulative impact of all the new rules on the industry and in turn its clients and the economy,” he adds.