By Deon Roberts
Two senators will unveil this week a bill that is expected to call for tougher capital requirements for banks in an attempt to prevent another financial institution’s failure from crippling the U.S. economy.
Sherrod Brown, D-Ohio, and David Vitter, R-La., both of whom in October issued a statement that called for tightening capital requirements, are scheduled to provide details on a bill that they’ve been working on for months.
According to a supposed draft of the bill on the website of the news outlet Quartz, banks’ capital would have to equal at least 10 percent of their assets. Federal law mandates at least 3 percent under so-called Tier 1 requirements.
Also, banks with at least $400 billion in assets would pay surcharges, according to the supposed draft. Charlotte-based Bank of America and San Francisco-based Wells Fargo fall into that category.
On Tuesday, Brown and Vitter will address “efforts to break up Wall Street megabanks” at the National Press Club in Washington, D.C., according to a press release from the senators. On Wednesday, the Brown-Vitter bill details, including the capital requirements, will be released at a press conference in the U.S. Senate.
The proposed capital requirements “would ensure financial institutions have adequate capital to protect against losses,” the senators’ press release said.
Despite the opinions of some, including Federal Reserve Chairman Ben Bernanke, that more can be done to rein in so-called too-big-to-fail banks, some think Brown and Vitter will have a tough time getting support for their bill.
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