The Center for Public Integrity

Mega-banks' capital – The very largest, "too-big-to-fail" banks will have to hold capital equal to about 9.5 percent of their risk-weighted assets, compared with about 7 percent for other big banks, international banking regulators in Basel said over the weekend. And if any of those mega-banks get even larger, they could face an additional 1 percent requirement, bringing their capital up to 10.5 percent.

That means Bank of America, Citigroup, and JPMorgan Chase & Co. will need a combined $150 billion of extra capital, reports the Wall Street Journal’s Heard on the Street column. Basel regulators give them until 2019 to fully meet the tougher standards, enough time to build capital through profits while also reducing risk-weighted assets.

U.S. banks have objected to higher capital standards being considered by American regulators, saying such a move could cause them to lose business to overseas banks. But Sheila Bair, head of the Federal Deposit Insurance Corp., and Federal Reserve Gov. Daniel Tarullo have said requiring banks to hold more capital is a sensible way of increasing their ability to absorb potential losses.

Four Democratic senators are demanding new leadership at the Office of the Comptroller of the Currency after acting chief John Walsh said banks shouldn't be burdened with capital standards that are too high.

Sen. Sherrod Brown of Ohio sent a letter to Treasury Secretary Timothy Geithner on Thursday saying Walsh's resistance to tougher capital requirements threatens the economy, The Hill reports.

Brown joined Sens. Jack Reed of Rhode Island, Jeff Merkely of Oregon, and Carl Levin of Michigan in calling for Walsh's removal after he said in a speech that current capital levels are “extraordinarily high” by historical standards, and any increase would stifle economic growth.

Regulators must "stick to their guns" - Sheila Bair, who steps down as head of the Federal Deposit Insurance Corp. next month, urged banking regulators to "stick to their guns" and fight industry attempts to water down Dodd-Frank reforms that are needed to prevent another financial crisis.

In a speech today at the National Press Club, Bair criticized banks for fighting higher capital requirements and said that was the kind of  "short-term thinking that got us into this mess in the first place."

If regulators fail to follow through on tough new rules for bank capital and systemically important financial institutions, "it will need to be explained that the alternative is to risk another financial crisis that could someday throw millions of people out of work and wreck our public finances," she said.

Belt-tightening - Senate Republican Leader Mitch McConnell says starving financial regulatory agencies of the money needed to carry out the Dodd-Frank law would be a good thing for America.

"The less we fund those agencies, the better America will be," McConnell said at a breakfast hosted by the Christian Science Monitor. He said that Dodd-Frank followed health care reform as the “second worst” bill ever passed by Congress during his decades-long tenure. 

"I think anything we can do to slow down, deter or impede their ability to engage in this oppressive overregulation, which is freezing up our economy, would be good for our country,” McConnell said, according to accounts published by The Hill and the Financial Times.

Bank lobbying – The American Bankers Association spent $2 million in the 2011 first quarter lobbying the federal government to reform or repeal key parts of the financial reform law, a sharp increase from $1.4 million spent in the 2010 fourth quarter, the Associated Press reports.

The banking group is fighting regulators as they attempt to finalize rules to limit debit card swipe fees, report over-the-counter derivatives trading and to boost capital requirements. In the first quarter, the influential banking group met with officials at the Fed, Securities and Exchange Commission and Treasury Department.

A daily round-up of analysis, commentary and news about the Dodd-Frank financial reform law.

Hedge fund regulations – The Securities and Exchange Commission adopted rules today that will require hedge funds and private equity funds that each manage more than $150 million in assets to register with the agency by March 30.

The move will subject funds to surprise examinations by the SEC, and require them to file reports about the size and strategy of their funds, any conflicts of interest, disciplinary history, and the identities of key gatekeepers such as auditors and prime brokers. "Our proposal will give the Commission, and the public, insight into hedge fund and other private fund managers who previously conducted their work under the radar and outside the vision of regulators," SEC Chairman Mary Schapiro said.

The commission’s two Republican members opposed a provision that requires some venture-capital managers to report information about their funds, saying that the costs of doing so would hinder capital formation and innovation. Venture capital funds "which by definition cannot be sold to the public, already provide meaningful disclosure to their investors because investors demand information, and fund investors perform their own diligence in evaluating whether to invest in a fund," said SEC Commissioner Troy Paredes.

A daily round-up of analysis, commentary and news about the Dodd-Frank financial reform law.

From Goldman to CFTC – Gary Gensler spent 18 years working for Goldman Sachs Group Inc. and was among the Clinton administration officials who rejected any regulation of the derivatives market. Now, as chairman of the Commodity Futures Trading Commission after the near-collapse of global markets, “my thinking has evolved," Gensler tells Bloomberg Markets magazine.

Gensler is guiding the CFTC as it writes more than 50 rules on derivatives trading -- new regulations that face united opposition from his former Wall Street colleagues and banking lobbyists. He also faces an anti-reform sentiment on Capitol Hill, where House Republicans want to slash the CFTC's annual budget by 15 percent.

“Capital matters” – Raising how much capital U.S. banks must have on hand is “the most important reform moment since the financial crisis broke out three years ago” and surpasses the Dodd-Frank law in importance, says New York Times.columnist Joe Nocera.

Big banks should be obliged to hold capital equal to 14 percent of their assets to prevent future taxpayer bailouts, he says. Even if other countries do not follow the U.S. lead in raising capital standards, Nocera says American banks would still remain competitive because they are in better shape and can remain solvent.