Washington, D.C. — Francisco Covas, BPI executive vice president and head of research, issued the following statement today in response to remarks by Federal Reserve Vice Chair for Supervision Michael Barr on bank capital requirements:
We commend Vice Chair Barr for his thoughtful approach, but we worry he is overly focused on the cost of calibrating capital requirements too low, as he makes little to no mention of the costs of calibrating capital requirements too high. Further increasing bank capital requirements will reduce U.S. economic growth, further diminish capital markets liquidity, push more activity into the unregulated shadow banking sector and further disincentivize bank lending to small businesses and low- to moderate-income households.
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About Bank Policy Institute.
The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.