By Douwe Miedema
WASHINGTON, Feb 2 (Reuters) - A plan by regulators for theworld's biggest banks to hold more capital to withstandfinancial shocks is overly demanding, major U.S. bank groupssaid on Monday, urging further study into how to avoid futuretaxpayer bailouts.
The proposal by the Financial Stability Board, a globalgroup of regulators, would force big banks to have between 16and 20 percent of their liabilities in equity and long-termbonds that can be written down in times of financial stress.
The banks supported the idea of boosting their capitalbuffers - so-called Total Loss Absorbing Capacity, or TLAC - tomore than what is required by the internationally agreed BaselIII rules, they said in a letter to the FSB.
"But our empirical analysis shows that a TLAC requirementcalibrated even on the low end of the FSB's proposed range ismore than is needed," said Paul Saltzman, who heads the ClearingHouse Association, one of the groups.
The letter was also signed by the Securities Industry andFinancial Markets Association, the American Bankers Associationand the Financial Services Roundtable. The banks did not give anumber for what they thought the TLAC level should be.
The FSB launched the plan last year, marking a watershed ina quest to end taxpayer bailouts of banks, after governmentsspent billions of dollars on propping up Wall Street andEuropean banks during the credit crisis.
The TLAC proposal will apply to the 30 largest banks acrossthe world such as JP Morgan Chase, Goldman Sachs,HSBC, Credit Suisse, Santander, andMitsubishi UFJ FG.
Such banks have often been seen as "too-big-to-fail,"because their demise would wreak havoc in the financial system,and markets expected governments to always come to their rescuewith taxpayer money if they landed in trouble.
The Federal Reserve is working on the U.S. implementation ofthe TLAC proposal. It has often come out with rules that aretougher than the global standards in the past few years. (Reporting by Douwe Miedema; Editing by Eric Beech)
HSBC Holdings (HSBA)