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Washington
Bair Large banks need to increase capital
WASHINGTON (4/2/09)--Large banks deemed “high risk” should raise their capital to protect the overall financial system, said Federal Deposit Insurance Corp. (FDIC) Chairman Sheila Bair in a speech Wednesday that was widely reported by national media. The capital requirements should be a part of regulatory oversight of risky institutions. Regulators must end the notion that large banks are “too big to fail,” Bair said (Associated Press April 1). Last week, the Obama administration released details of a plan that would overhaul financial regulation. The plan would establish a single agency to oversee systemically important firms and critical payment and settlement systems. It also would establish higher standards on capital and risk management for systemically important firms (News Now March 27). Earlier this year, Bair said that U.S. banks were well-capitalized. However, she acknowledged that prolonged shocks to the banking system would require institutions to increase their capital reserves (News Now Feb. 25).


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