U.S. regulators mull steps to strengthen bank capital standards - WSJ
May 2 (Reuters) - U.S. regulators are considering requiring certain large, complex banks to maintain a minimum level of unsecured long-term debt to ensure that creditors bear any losses if a firm collapses, the Wall Street Journal reported, citing people familiar with the discussions.
The Federal Reserve and Federal Deposit Insurance Corp also see a benefit in having banks issue such debt since it would reduce reliance on volatile short-term funding markets, the Journal said. ()
However, such long-term debt could be expensive for banks to issue since it would have to carry a higher interest rate to reflect the risk that creditors take in assuming an unsecured position, according to the paper.
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