Banks need to hold another $200bn cash cushion

Janet Yellen

In the latest move from regulators to prevent banks from being too big to fail, eight institutions have been hit with capital surcharges.

The Federal Reserve announced rules Monday on banks deemed to be Global Systemically Important Financial Banks, or G-SIBs. The Fed said it expects all eight banks on the list to meet their surcharge requirement by 2019. though JPMorgan Chase , the biggest U.S. bank, faces a $12.5 billion shortfall. JPM had the highest surcharge level at 4.5 percent followed by Citigroup with 3.5 percent.

The big banks are being required to hold an extra $200 billion capital cushion.

The move come as regulators continue to take steps to prevent another financial crisis the likes of which rocked the U.S. and global economy in 2008. Much of the damage came due to the interconnectivity of big banks as well as the damage they would cause should one fail.

Lehman Brothers collapsed in September 2008, triggering the worst effects of the crisis.

The Fed also issued final rules for GE Capital, considered a nonbank systemically important financial institution, or SIFI. The U.S. central bank is allowing GE capital to meet the standards in two phases. It is being permitted to do so because its parent company, General Electric , is in the midst of shrinking its finance arm and is in the process of trying to get de-designated as a nonbank SIFI.

The surcharges have been controversial because U.S. banks are being held to higher standards than their global competitors. The move to require the extra level of capital arose from a global accord at Basel, Switzerland, in 2011.

The surcharges apparently will not be part of the next round of bank stress tests.

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