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Big banks face higher capital requirements

WASHINGTON, Sept. 5 (UPI) -- The U.S. government has released outlines of a plan requiring "too-big-to-fail" banks to carry more capital reserves to avoid future bailouts, analysts say.

The U.S. Treasury Department this week unveiled a conceptual outline of the proposal, which Obama administration officials are expected to discuss with world leaders in London during the weekend's preparatory meetings for this month's Group of 20 summit in Pittsburgh, The Washington Post reported.

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The new requirements would not require Congressional approval. They are aimed at requiring giant banks such as Citigroup to carry more capital reserves. Although that could result in higher fees for consumers and make obtaining loans more difficult, it would also reverse decades of U.S. banking policy that encouraged banks to get bigger, instead pressuring such firms to become smaller and more stable, the Post said.

"While seemingly technical, the policy will have profound impact on U.S. financial services firms, especially since much in it can and will be implemented without legislation," said Karen Shaw Petrou, managing partner of Federal Financial Analytics, which tracks regulatory issues for clients in the financial industry.

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