As US banks shrink, debate surrounds whether resizing is the
intentional result of regulation. For Federal Reserve governor
Jerome Powell, however, there’s a choice
– and it’s for the banks to make.
At the annual Securities
Industry and Financial Markets Association (Sifma) and The Clearing House
(TCH) prudential regulation conference on June 2, Federal Reserve
governor Powell was asked if he thought that policymakers had
intended certain bank structural changes and downsizing to
occur as a result of post-crisis regulation.
In his response, Powell stressed how raising required
capital, as a result of both the Comprehensive Capital Analysis
and Review (CCAR) and the G-Sib surcharge, is inducing
banks to ask themselves questions about how much capital they
"You can either have substantially higher levels of capital,
in which case you will be much less likely to fail, or you can
take steps to reduce your...