Fed to vote on Basel capital rules, also eyes stricter reforms

WASHINGTON Tue Jul 2, 2013 9:21am EDT

Federal Reserve Board Governor Daniel Tarullo testifies before the Senate Banking, Housing and Urban Affairs Committee in Washington February 14, 2013. REUTERS/Gary Cameron

Federal Reserve Board Governor Daniel Tarullo testifies before the Senate Banking, Housing and Urban Affairs Committee in Washington February 14, 2013.

Credit: Reuters/Gary Cameron

WASHINGTON (Reuters) - The Federal Reserve on Tuesday is set to vote on whether to adopt the international Basel III capital rules and will also consider a series of other reforms that go beyond that international agreement.

Daniel Tarullo, in charge of financial supervision at the Fed, said the Fed was working on four new rules for the country's biggest banks in the coming months, some of which he had alluded to in an earlier speech.

The Fed said it would adopt a leverage ratio, which measures equity as a percentage of assets without looking at risk weightings, beyond the 3 percent required by Basel.

The U.S. central bank was also working on a new rule to address risks in short-term wholesale funding and a rule on combined equity and long-term debt, as well as a capital surcharge for banks that pose a potential threat to the entire system.

The Fed had also adapted the risk weightings for residential mortgages and some other assets for smaller banks to address concerns that the regulation was too burdensome.

(Reporting by Douwe Miedema; Editing by Chizu Nomiyama)

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