Federal Reserve adopts tougher rules on bank reserves

The Los Angeles Times has the article Federal Reserve adopts tougher rules on bank reserves.

The Federal Reserve adopted tougher requirements for bank balance sheets, sending a message to the financial industry that it will cost much more to remain an institution that’s considered too big to fail.

The rules, approved Tuesday as part of an international agreement designed to prevent another financial crisis, make it more expensive to be a very big bank while going easier than originally proposed on small and medium-size institutions.

It is worth noting that this comes from an international agreement, so the banks in one country won’t have the excuse that they cannot compete in the international market if they are subject to new restrictions.

The second thing to note is that though this agreement must have been in the works for some time,  no mention of such an effort hit the press that I commonly follow.  This lack of widespread notice gives demagogues the opportunity to try to win elections by claiming the government isn’t doing anything to solve the problem.  For instance, Gabriel Gomez was going to go to Washington in part to fix the problems of banks that are too big to fail.  Maybe he was such a good politician after all, that he didn’t even have to win the election to get the problem solved.

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