The Federal Reserve is seeking public comment on the standardsit would use in requiring the biggest banks to set aside additionalcapital as a buffer in periods when market risks raise the threatof future losses.

The countercyclical capital buffer is meant to ensure thatinternationally active financial institutions have enough capitalto absorb shocks without threatening the broader economic system.It will apply to banks with more than US$250 billion in assets suchas JPMorgan Chase & Co., Citigroup Inc., and Goldman SachsGroup Inc., and those with more than $10 billion in foreignexposure.

The Fed said it is setting the buffer at zero for now, but intimes of elevated risk that level could go up to 2.5 percent ofrisk-weighted assets. Regulators would give institutions a year tophase in any increase, which would be in addition to alreadyrequired minimum total risk-based capital levels banks mustmeet.

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