The Federal Reserve may relax capital requirements for large banks, leading to breakthroughs in lobbying by Wall Street giants

Amidst the recent turmoil in the financial market, the news that the Federal Reserve intends to relax its planned capital increase requirements for large banks has attracted widespread attention. The Zhitong Finance APP learned from foreign media that this possible policy adjustment originated from negotiations among three US regulatory agencies and is considered a major victory for bank lobbying groups. This change not only affects the interests of Wall Street giants, but also affects the stability and development of the entire financial market.

It is understood that the mandatory capital increase plan proposed by the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency aims to enhance the ability of large banks to resist potential risks by increasing their capital levels. However, this plan has faced strong opposition from several major Wall Street firms, including JPMorgan Chase. These banks believe that excessive capital requirements will reduce their profits and may inhibit the development of their lending business, thereby having a negative impact on the overall economic environment.

In this context, Jamie Damon, CEO of JPMorgan Chase, actively lobbied with CEOs of other major Wall Street firms. They bypassed the main designer of the plan, Michael Barr, the Vice Chairman of the Federal Reserve responsible for bank regulation, and directly communicated with other officials, including Federal Reserve Chairman Powell. This strategy demonstrates the high importance and firm determination of banking giants towards policy adjustments.

Firstly, after a series of negotiations and negotiations, these three regulatory agencies may reduce the original mandatory 20% capital increase plan by about half. This possible policy adjustment is undoubtedly good news for Wall Street's major banks, as it will help alleviate the capital pressure they face and may drive further development of their loan business.

However, it is worth noting that this policy adjustment is not without controversy. Some market observers believe that reducing capital requirements may reduce banks' risk resistance, thereby increasing potential risks in the financial market. At the same time, regulatory agencies also need to weigh the interests of all parties in negotiations to ensure the rationality and effectiveness of policy adjustments.

In addition, a turning point in the negotiations lies in how banks account for capital market activities, including trading positions. This issue involves the calculation method of bank capital adequacy ratio, which has a significant impact on large banks such as JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America, and Citigroup. Therefore, regulatory authorities need to fully consider this factor in the negotiation process to ensure that policy adjustments can truly meet the actual situation and development needs of the market.

For this possible policy adjustment, on the one hand, reducing capital requirements can help alleviate the capital pressure on banks, promote the development of their loan business, and thus have a positive impact on economic growth; On the other hand, this may also increase the potential risks in the financial market, requiring regulatory agencies to strengthen supervision and risk prevention measures.

Overall, the Federal Reserve's plan to relax the capital increase requirements for large banks is a complex and sensitive issue. In future negotiations and negotiations, regulatory authorities need to fully consider the interests of all parties and the actual market situation, and formulate policy plans that meet the requirements of financial stability and promote economic development. At the same time, all parties in the market should maintain a rational and objective attitude, and work together to promote the healthy development of the financial market.