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The nation’s biggest banks would have to raise an estimated $500 billion in additional capital under new draft legislation making the rounds of Wall Street and Capitol Hill.
The draft Brown-Vitter proposal, named after Sen. Sherrod Brown (D-Ohio) and Sen. David Vitter (R-La.), could lead to the breakup of big banks and hamper lending, analysts and critics said.
“The bill is so anti-American as to have one think it was being written by the Chinese rather than any American legislator,” outspoken bank analyst Dick Bove told The Post.
In a note to clients, Bove estimated banks would need a half-billion dollars in additional capital to comply with the tighter regulations.
Already the draft proposal, which was leaked late Friday but hasn’t been formally introduced yet, has drawn fire from bank advocates and lobbying groups.
“Excessively high capital will restrict banks’ ability to lend to businesses and job creators, and hurt economic growth,” said Rob Nichols, president and CEO of the Financial Services Forum.
A spokeswoman for Brown said he intended to introduce the draft to his Senate colleagues later this month, but declined to comment further.
To be sure, observers say, the legislation targeting “too big to fail” banks nearly five years after the financial crisis will have a tough time mustering enough votes to pass.
Recently, Brown and Vitter have been pushing tighter capital requirements for the largest banks, arguing that the Dodd-Frank financial reform act doesn’t go far enough.
Banks with more than $400 billion in assets would have to maintain around 15 percent in equity relative to their assets.
Under the draft proposal, banks would face further pressures to meet regulatory capital standards. Firms would not be allowed to value Treasuries, for instance, more highly than other types of reserve assets.