Newsletter June 2011: SIFI capital surcharge debate hots up

WASHINGTON – Somewhat mixed messages seem to be emanating from the US administration over the size of the capital surcharge that is likely to be imposed on the biggest banks. In early June, Federal Reserve Board member Daniel Tarullo hinted that, on some calculations, the surcharge could range from 1.5% to more than 7%, depending on the “expected impact” that the failure of a major bank would have on the financial system. This surcharge would be on top of the 7% minimum core equity capital required under the proposed Basel III standard.