Bank of America gives a recommendation on the reorganization of the federal regulatory agencies in the country too big, but fail institutions on how to pay for future crises, the Wall Street Journal reported, citing people familiar with the conversation.
"Wall Street Journal" said the proposal, on May 22 at a private meeting, the U.S. Federal Reserve Bank's efforts to pre-empt more stringent rules official, who believe that the bank is still a crisis that could threaten financial stability.
Under the scheme, the world's largest financial services holding company will maintain a certain amount of debt and equity, will be used to prop up any failed bank regulators seized subsidiaries.
Some banks may even be forced to issue an expensive long-term debt, according to the newspaper.
In his speech, the bank said, each of them will agree to hold combined debt and equity equal to its risk-weighted assets of 14%, "Wall Street Journal" said.
Six major U.S. banks may have to hold additional capital buffers, because the international standards, with a total capacity of up to 15 to 16.5 percent of the people told the "Wall Street Journal."
Currently, Wells Fargo (WFC.N: Quote) existing debt and equity ratio was 14%, JP Morgan Chase (JPM.N: Quote), Bank of America (BAC.N: Quote) and Citigroup (CN) has 20.2% and 18.4%, 22.1%, respectively, "Wall Street Journal" said, citing Goldman Sachs (GS.N: Quote) estimate.
U.S. Federal Reserve Board may not be immediately reached U.S. by Reuters outside regular business hours to comment.
Bank regulators have not yet responded to the proposal, and may reject it in favor of their own plans. However, they are favored by banks to issue more debt, because it can provide a failed bank liquidity and government officials, senior managers and replaced to fix the problem, "Wall Street Journal" said.
 
 



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