Fed issues draft Dodd-Frank big bank rules

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Fed issues draft Dodd-Frank big bank rules
from MarketWatch.com - MarketPulse WASHINGTON (MarketWatch) - The Federal Reserve on Tuesday released a package of post-crisis proposals detailing new tougher rules for big banks, including a measure that would limit a large financial institution's credit exposure to other large banks. The central bank said it would implement an aspect of a global agreement on bank capital, known as Basel III, named after the city in Switzerland where past agreements have been formed. However, the central bank said it would release a proposal later providing the details of how it would do so. The agency proposed new stringent rules on transactions between big banks, exposing them to possible leverage prohibitions and sets forth a series of new punishments for violators. The regulations would impact the largest U.S. banks including Bank of America Corp. , Citigroup Inc. and J.P. Morgan Chase & Co. . Based on the proposal, a large designated bank with more than $500 billion in assets is prohibited from having a credit exposure of more than 10% of its stock and surplus with a counterparty bank that also has more than $500 billion in assets.