The Fed’s recent action capping dividend payments might prove inadequate once the coronavirus crisis really hits banks’ capital.
The Fed has already eased certain capital requirements in response to the coronavirus pandemic. It should avoid making any further adjustments to the surcharge, which is meant to keep global banks from creating systemic risks.
In separate letters to Congress, the Fed asked for legislative action to ease Tier 1 capital minimums while the FDIC said it may use its own authority to address the market strain on banks.