Federal regulators propose stricter measure of strength for 8 big US banks

WASHINGTON – Regulators took a step Tuesday toward requiring eight of the largest U.S. banks to meet a stricter measure of health to reduce the threat they pose to the financial system.

The Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency proposed that banks increase their ratio of equity to loans and other assets from 3 per cent to 5 per cent. In addition, the banks’ deposit-holding subsidiaries would have to increase that ratio to 6 per cent.

If adopted, the rule would take effect in 2018.

It would apply to U.S. banks considered so big and interconnected that each could threaten the global financial system: Goldman Sachs, Citigroup, Bank of America, JPMorgan Chase, Wells Fargo, Morgan Stanley, Bank of New York Mellon and State Street Bank.