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FDIC’s Thomas Hoenig Cautions Policy Makers on Easing Capital Requirements 

November 10, 2016

Donna Borak, The Wall Street Journal

A top U.S. bank regulator Wednesday cautioned American policy makers to resist political pressure to weaken proposed capital requirements that global regulators hope to complete this year.

Federal Deposit Insurance Corp. Vice Chairman Thomas Hoenig said the recent push by some global policy makers for “capital neutrality"—an effort to persuade the Basel Committee for Banking Supervision to make only small changes, if any, in capital requirements for global banks—is ill-advised.

“It is disappointing that some are suggesting that now is not the time to raise capital further,” Mr. Hoeing said in remarks prepared for delivery Wednesday to the Annual Risk USA conference in New York. “The issue has even taken a political tone, as some assert that improving capital would be detrimental to the fragile global economy.”

Mr. Hoeing has said that negotiations to revise the Basel III capital framework have become a “political mandate pressing regulators to weaken” how banks assess the riskiness of their assets as well as the so-called leverage ratio. The ratio, a measure of capital held by a bank against its total assets, curbs the amount of borrowing, or leverage, banks can do. Read more

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