Financial regulators will vote Tuesday to finalize tough limits on how much U.S. banks can borrow to fund their business that would be stricter than the rules firms abroad must follow.
The rules by the Federal Reserve, Federal Deposit Insurance Corp (FDIC) and Office of the Comptroller of the Currency (OCC), would force banks to fund part of their business through less risky sources such as shareholder equity, rather than by borrowing money.
Global regulators agreed in the so-called Basel III accord to limit the reliance on debt after the 2007-2009 financial crisis left banks on a shaky footing.
The U.S. officials' vote on Tuesday would implement a portion of the agreement known as the leverage ratio.
Unlike risk-based capital rules, leverage limits are calculated as a percentage of a bank's total assets and are seen as harder to game.
The final rules closely follow a proposal regulators issued last year and would require the eight biggest U.S. banks to hold capital equal to 6 percent of their total assets. Their bank holding companies would have to meet a 5 percent ratio.
That's higher than the 3 percent ratio included in the global Basel agreement. Smaller U.S. banks would be held to the 3 percent ratio, regulators said.
"In my view, this final rule may be the most significant step we have taken to reduce the systemic risk posed by these large, complex banking organizations,'' FDIC Chairman Martin Gruenberg said in remarks prepared for the vote.
The rules would apply to JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, Morgan Stanley, Bank of New York Mellonand State Street.
Banks see tougher capital rules as costly for them, but U.S. officials said on Tuesday the banks appear to be on their way to meeting the higher requirements by the 2018 deadline.
They said the eight big bank holding companies would need to boost their top-tier capital by about $68 billion in order to meet all of the new requirements.
The agencies also will propose on Tuesday adjusting the way banks tally up their assets under the leverage rules. They will tweak those calculations to bring them more in line with the Basel rules.
Regulatory officials said the proposed changes, which would apply to banks meeting the 3 percent Basel ratio as well as the eight biggest firms, would require more capital for credit derivatives and less for traditional loans.
They said the changes would result in a "modest" increase in the amount of capital banks would need to hold.