Fed proposes new, tougher rules for big banks

December 20, 2011 - 3:10 PM

NEW YORK (AP) — The Federal Reserve says the largest U.S. banks and financial companies should hold extra cash on their balance sheets to cushion themselves against financial crises.

The proposal by the chief U.S. banking regulator, made Tuesday, will affect banks with assets over $50 billion in assets. There are even stricter rules for companies with over $500 billion in assets such as JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc.

U.S. banks opposed the rules. Banks said they would be forced to hold too much extra cash, hampering their ability to make loans.

The rules were first spelled out by international regulators in Basel, Switzerland and were specifically targeted at large interconnected global financial institutions.