New Capital Regulations Draw Ire From Major Banks

The Bedford Report Provides Investment Research on Bank of America & Citigroup

NEW YORK, NY -- (Marketwire) -- 06/21/11 -- Earlier this month, regulators announced that the world's largest banks could face a capital buffer of as much as three percentage points in an effort to keep taxpayers off the hook the next time a lender gets into difficulty. Large financial institutions are planning a campaign to persuade regulators that imposing higher capital requirements on big banks could hurt the economic recovery and not achieve its goal of reducing risk. The Bedford Report examines the outlook for companies in the Financial Sector and provides equity research on Bank of America Corporation (NYSE: BAC) and Citigroup, Inc. (NYSE: C). Access to the full company reports can be found at:

The Basel committee has said all banks should hold core Tier 1 Capital of 7 percent, and is considering additional requirements for those banks it considers systemically important financial institutions -- firms whose collapse would harm the global economy. The latest capital surcharge will be on top of the new Basel III minimum capital set for all banks. This capital surcharge will depend on criteria regulators have already outlined, such as how interconnected the bank is to the rest of the financial system and how easily its operations could be substituted by another lender.

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As part of their push to understand the factors behind the financial crisis in order to prevent a recurrence, the Federal Reserve Bank of New York and the Office of the Comptroller of the Currency are embedding regulators at some of the United States' largest financial institutions. Regulators have historically been placed in financial institutions in order to inspect for safety, performance, and quality of management.

About 150 such regulators are scattered across banks overseen by the New York Fed. That total will double by this fall, The Wall Street Journal reports.

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