Ex-FDIC chair calls for stronger capital requirements

CHARLOTTE, N.C. — Sheila Bair, former chairwoman of the Federal Deposit Insurance Corp., called Thursday for tougher capital requirements for banks, despite claims by some in the industry that such a move would harm the economy. “We see banks having near-pre-crisis levels of profit,” said Bair, who was in Charlotte for a Federal Reserve Bank of Richmond symposium. Still, she said, some in the banking industry claim that raising capital requirements would hurt lending, an argument she doesn’t buy.

“If you look at the banks that … are doing proportionally more lending, you are also going to see the banks with the most capital,” she said.

Sens. David Vitter, R-La., and Sherrod Brown, D-Ohio, have reportedly proposed a bill that would force banks to have higher levels of capital to weather another downturn. According to a supposed draft of the bill leaked to the website for news outlet Quartz, banks’ capital would have to equal at least 10 percent of their assets.

Bair said the talks about raising capital levels are getting pushback from some in the banking industry who want to keep capital levels “low.”

“It’s a debate that seems like never ends,” she said.

“There’s a lot of pressure, I’m happy to say, to strengthen those rules.”