More Capital, Not More Debt, Is a Better Response to Regional Bank Collapses
WASHINGTON, D.C. – Federal banking regulators today released new proposed rules for banks with more than $100 billion in assets. Following the downfall of Silicon Valley Bank, Signature, Silvergate, and First Republic earlier this year, banks would need to raise additional long-term debt to help prevent the collapse of regional banks. Bartlett Naylor, financial policy advocate for Public Citizen, released the following statement:
“While we appreciate the need to calm depositors who learn their bank’s assets are less than their liabilities, adding new liabilities in the form of long-term debt isn’t the best remedy. Instead, regulators should require more real capital: a wider gulf between assets and liabilities. Dividends should be suspended, and C-suite pay reduced until capital levels reach a reasonable level.”