BENGALURU – United States regulators are preparing to tighten rules for large banks, which could raise their capital requirements by 20 per cent on average, The Wall Street Journal (WSJ) reported on Monday, to boost the financial system’s resilience after a spate of midsize bank failures in 2023.

Regulators are on track to propose the changes as early as June, the WSJ reported, citing people familiar with the matter.

In May, the US Federal Reserve’s top regulatory official told Congress that the central bank would likely unveil its plan to ratchet up capital rules for banks this summer and ensure supervisors more aggressively police lenders following the bank failures.

Fed vice-chair for supervision Michael Barr said the central bank was “carefully considering” rule changes for larger regional banks.

The WSJ said that the precise amount of capital requirements will depend on the bank’s business, with US megabanks with big trading businesses expected to face the largest increases.

Banks, such as Morgan Stanley and credit card giant American Express, that are heavily dependent on fee income, such as from investment banking or wealth management, could also face large capital increases, the WSJ said.

The Fed is playing a leading role in crafting the measure, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, according to the WSJ.

All three agencies are expected to seek comment on the proposed capital rules before voting to complete changes and eventually implementing them over the coming years, the report said.

JPMorgan Chase & Co chief executive Jamie Dimon was among critics blasting on more cumbersome capital requirements, calling an upcoming increase “bad for America” in 2022 ahead of a pair of congressional hearing. REUTERS, BLOOMBERG