“It was curious that the Fed, in proposing a new surcharge for U.S. banks, that they would choose to in effect double down on an arguably flawed methodology, especially one that would cause a U.S. bank’s surcharge to increase merely because of the dollar strengthening,” John Gerspach, chief financial officer of Citigroup, said, arguing that the dollar’s rise against the euro likely meant the bank would face a higher surcharge.
The Fed’s proposed rule would phase in starting in 2016 and would be fully implemented in 2019. The banks would meet the new requirements by funding themselves with less borrowed money and more common equity, which would diminish profitability or their return on equity.
Financial Select Sector SPDR
For more information on the financial sector, visit our financial category.