Federal Reserve Bank of New York President William Dudley said new rules increasing capital standards for banks will impose some costs on the financial system that are outweighed by benefits, including greater stability and long-term growth.
“There’s no question in my mind that there’s going to be some consequences for lending margins,” Dudley, 57, said today in a speech in Washington to the Institute of International Bankers. “Careful review of this suggests that the adjustment to lending margins is going to be quite modest.”
His comments were similar to a speech yesterday.
Regulators have tightened capital requirements and standards such as liquidity rules after coming under political fire to curb banks’ risk-taking amid taxpayer bailouts. The Basel Committee on Banking Supervision in September reached an agreement for rules that more than double capital requirements.
--Editors: James Tyson, Christopher Wellisz
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