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The
United States adopted both stress tests and capital surcharges
for banks in the wake of the 2007-2009 financial crisis, when
U.S. investment bank Lehman Brothers collapsed and set off a
deep global recession.
Boston Fed President Eric Rosengren, among the U.S. central
bank's more influential regulators, said those changes have
significantly reduced the likelihood that so-called systemically
important financial firms would fail.
The Federal Reserve Board has not yet decided whether systemic
banks will be required to include capital surcharges in the
overall capital requirements under the regular stress tests. The
regular tests determine whether firms would survive deep
hypothetical shocks to markets and the economy.
"I would be in favor of such changes," Rosengren, who is not on
the Fed Board, said of including the surcharges or raising
minimum requirements "by other means."
Systemically-important firms such as JPMorgan Chase and Co <JPM.N>
and Goldman Sachs Group Inc <GS.N> "should be required to
increase post-stress minimums through one means or another," he
told The Financial Stability Institute in Cape Town, South
Africa, according to prepared remarks.
The surcharges are estimated to be between 1.0 to 4.5 percent.
Rosengren, who did not comment on U.S. monetary policy, also
applauded Standard & Poor's and other rating agencies for seeing
the benefits of a new Fed rule, known as total loss-absorbing
capacity, that aims to ensure enough private, and not public,
funds would be used if a too-big bank failed.
"It is encouraging to see that rating agencies are viewing the
actions taken as significantly reducing the ... problem," he
said.
(Reporting by Jonathan Spicer; Editing by Diane Craft)
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