Powell: The Federal Reserve must focus on ensuring the safety of large banks' critical areas.

Federal Reserve Chairman Powell said on Tuesday that the Fed's regulatory practices "must focus on determining safety and soundness in key areas." In his opening remarks at a large bank capital framework comprehensive review meeting in Washington, Powell said, "We need our large banks to have sufficient capital and effectively manage their major risks." Powell made the comments as the Fed is finalizing capital rules for U.S. large banks, known as the Basel III endgame rules. Regulators have faced criticism for proposing rules that are too strict and overly restrict banks' lending capacity. "We need large banks to be able to compete freely with each other, compete with non-bank financial institutions, and compete with banks in other jurisdictions to provide capital and support economic growth," Powell said. He also emphasized that central banks need to openly evaluate bank regulatory rules, saying, "The Fed is a dynamic institution. We are willing to listen to new ideas and feedback on how to improve the large bank capital framework." Powell noted that the benefit of this meeting is being able to "consider all components of the capital framework comprehensively, rather than looking at them in isolation. We need to ensure that all parts of the capital framework can effectively work together."