Michael S Barr: Capital supports lending

Speech by Mr Michael S Barr, Vice Chair for Supervision of the Board of Governors of the Federal Reserve System, at the American Bankers Association Annual Convention, Nashville, Tennessee, 9 October 2023. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Thank you for the opportunity to join you today. Let me start by recognizing Indigenous Peoples' Day, and the proud history and ongoing contributions of Native Americans throughout the United States. Last month, I had the privilege to visit Native communities and Native lands in Montana to learn about the economic development opportunities and challenges in Native economies and gain a better understanding of how we can foster a financial system that works for all, including those in Indian Country.

I have spent considerable time throughout my career thinking about the potential of the financial system to make a difference in the lives of individuals and their communities. Access to credit and other financial services is key to families navigating the many challenges they face and building a better future. The pursuit of this goal inspires many of you in your jobs as well. But in order for the financial system to play this role, it must be able to weather unexpected stress and continue to serve its customers and communities. And this requires that banks have sufficient capital, the subject of a proposal that the agencies recently put out for comment.

Most of the banks represented in this room today-and the vast majority of banks in the country-would not be subject to the Board's recent "endgame" proposal on bank capital. The proposal affects only the very largest banks. Even so, I suspect that you have heard a lot about it! The bulk of the proposed changes have been a decade in the making, and, as the name implies, the proposal is the last major plank to address gaps in regulation dating from the Global Financial Crisis.