Article
Review of Financial Regulation Studies

Raising Capital Requirements: At What Cost?

By: Malcolm Baker and Jeffrey Wurgler

Format:Print

Abstract

Since the financial crisis, bank capital positions have improved considerably. However, calls for heightened capital requirements have not abated. Federal Reserve Chair Ben Bernanke, Vice Chair Janet Yellen, and governors Daniel Tarullo and Jeremy Stein have all suggested that Basel III may not go far enough, particularly for large and complex banks. The legislation proposed by U.S. Senators Sherrod Brown and David Vitter lays out a plan to raise requirements further, and there are other recommendations both by policymakers and academics. This article examines an unrecognized cost of capital requirements that needs to be added to the regulatory conversations in Basel, Brussels, London, and Washington.

Keywords

Laws and Statutes; Capital; Banks and Banking; Banking Industry

Citation

Baker, Malcolm, and Jeffrey Wurgler. "Raising Capital Requirements: At What Cost?" Review of Financial Regulation Studies, no. 11 (Summer 2013): 4–6.