According to the report, the above proposal was submitted to the Federal Reserve at a closed meeting held on May 22, which was the first proposal made by the banking industry before government officials introduced stricter regulations. According to this plan, the largest financial services holding company in the United States will maintain a certain amount of debt and equity to support any failed bank subsidiary taken over by regulators. Some banks may even be forced to issue expensive long-term bonds.
American banks have agreed to make their total debt and equity account for 65,438+04% of risk-weighted assets. For the six largest banks in the United States that may hold additional capital buffers according to international regulations, the ratio may be as high as 15%- 16.5%. At present, the debt-to-equity ratio held by Wells Fargo Bank is 65,438+04%, that of JPMorgan Chase is 65,438+08.4%, and that of Bank of America and Citigroup is 20.2% and 22. 1% respectively.
Regulators have not yet responded to the above proposal, and may reject it, preferring to adopt their own plan. Regulators tend to let banks issue more debt, because this method can provide liquidity for troubled banks during the period when top government managers change and solve problems.