U.S. regulators set bank capital floor

WASHINGTON (Reuters) – Large banks will have to meet the same minimum capital standards as community banks, under a final rule U.S. banking regulators approved Tuesday.

The rule implements the Collins amendment of the Dodd-Frank financial oversight law, intended to set a capital floor for all U.S. banks and ensure large institutions cannot be less well-capitalized than their small-bank counterparts.

A Federal Deposit Insurance Corp official said the rule should not have any immediate impact. “Nobody is going to have to raise capital, let’s be absolutely clear.”

The capital floor provision was championed by outgoing FDIC Chairman Sheila Bair when the 2010 law was being drafted.

Bair and supporters of the proposal argue that during the financial crisis large bank holding companies were leaning on their federally insured banking units as a source of financial strength. That reliance helped lead to government bailouts, when the opposite should have been the case, Bair has said.

In response, the rule will prevent large bank holding companies from dipping below the strict capital standards of their federally insured bank units. (Reporting by Dave Clarke; Editing by Tim Dobbyn)