Bank capital rules alone won’t stop failures – supervision is vital | Howard Davies

The US Fed is planning tough reforms, but earlier intervention could have prevented collapses at Silicon Valley Bank and others

Bank capital is back in the financial headlines. In late July, US banking regulators, led by the Federal Reserve, announced plans to finalise the Basel 3 reforms (which banks like to call Basel 4, owing to their significant impact). The aim, according to a joint agency proposal, is to improve the strength and resilience of the banking system" by modifying large capital requirements to better reflect underlying risks, and by applying more transparent and consistent requirements.

The announced proposals are tougher than many expected. They will cover more banks - including some that had benefited from Trump-era concessions - and they will require banks to include unrealised losses from securities in their capital ratios (among other changes). Overall, US regulators expect the most complex banks to increase their capital by 16%.