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Wall Street Giants to Face New Limits on Credit Exposure to Other Large Firms

US regulators have unveiled plans to limit the exposures that big U.S. banks such as JPMorgan Chase & CO., Goldman Sachs Group, Inc., and Citigroup, Inc. have to one another as they push to make the financial system safer. The U.S. Federal Reserve is planning to impose limits on the U.S. banks’ dealings with others. The proposal would limit banks with assets US$500 billion or more from having net asset exposure to get below 15% of the lender’s tier 1 capital.  This is the second time that U.S. regulators are deciding on new credit limits after the Fed abandoned a 2011 proposal that called for a 10% cap.

An objective of this plan is to make sure that the Wall Street giants will not take others down with them if they collapse. Such credit exposure limits would help big banks targeting the problems that they faced in the 2008 financial crisis.

News Characteristics

Date : Mar 18, 2016
Region : North America
Industry : Banks
Function : Risk Management
Sub-Function : Liquidity Risk