Lates News

The Federal Reserve is set to release an additional $200 billion in capital for some of the largest banks in the United States to use. Over the past few years, the six largest banks in the US have set aside huge profits to prepare for the stricter standards proposed by former Federal Reserve Vice Chairman, Powell, with most of the $200 billion in capital to be released being the excess reserves that are no longer needed here. Later this week, US regulatory agencies will introduce a new proposal to update and in some cases relax US capital requirements, which will boost stock buybacks, loans, and trading activities. However, there are hidden risks: deploying these additional funds too hastily could lead to an unhealthy overheating of the economy and real estate market. Such a large amount of additional capital will present major banks with tough choices. Goldman Sachs, JPMorgan Chase, and Morgan Stanley all have to reconsider whether to return tens of billions of dollars directly to investors through stock buybacks. Given that stock prices are already high, this could come at a significant cost. All major lending institutions should be cautious about expanding their loan portfolios too quickly, as loosening lending standards almost always leads to an increase in bad debt.