US regulators to unveil plan for banks to build cash reserves

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US regulators to unveil plan for banks to build cash reserves
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US regulators are set to propose a rule that could significantly raise capital requirements for larger banks, forcing them to cut costs and retain earnings in an effort to cushion against potential losses that could harm customers and investors

The proposal, to be unveiled later on Thursday and voted on by the Federal Deposit Insurance Corporation and the Federal Reserve, marks the first into tighten bank oversight, particularly in the wake of spring turmoil that saw three large financial firms fail.

The rule, which would implement a 2017 agreement by global regulators, aims to overhaul how banks gauge their riskiness, and in turn how much money they must keep on hand.to soften, delay, or otherwise derail the government's long-planned effort. They argue the increases are unjustified and economically harmful.

"The banking industry probably didn’t influence the upcoming proposal as much as it wanted. But it’s determined to fight on what it sees as major issues in the months between Thursday and whenever a final rule is approved," Ian Katz, managing director at Washington-based Capital Alpha Partners, said in a research note.

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