The Federal Reserve agreed Tuesday to raise the amount of capital big banks must hold to prevent their collapse and reduce the threat they pose to the broader financial system.
The higher capital requirements were mandated by Congress in the aftermath of the 2008 financial crisis.
"With these revisions to our capital rules, banking organizations will be better able to withstand periods of financial stress, thus contributing to the overall health of the U.S. economy," said Fed Chairman Ben Bernanke.
Banks had lobbied to loosen the requirements, saying they could hamper their ability to lend. But critics say they failed to go far enough.
Hundreds of U.S. banks received federal bailouts during the financial crisis. The list included the nation's largest financial firms, including JPMorgan Chase, Goldman Sachs, Citigroup, Bank of America and Wells Fargo. The banking industry has been recovering steadily since then, with overall profits rising and banks starting to lend more freely.
Under the new rule, all banks will need to maintain a level of high-quality capital equal to 4.5 percent of their loans and other assets, weighted by how risky those assets are.
A Fed staff memo said banks with more than $10 billion in assets, and more than 95 percent of those with less than $10 billion in assets, would meet the 4.5 percent requirement. There is currently a 4 percent requirement, but it is not restricted to just high-quality capital, such as bank stock or retained earnings.
The nation's 19 largest banks with assets of $250 billion or more will have to start meeting the requirements by Jan. 1. The rules will be fully phased in by the end of 2018.
The final rule dropped a provision from an earlier draft that required banks to hold higher amounts of capital for mortgage loans judged to be risky. The change was made after the housing industry and smaller community banks argued against this rule. They said it would restrict mortgage loans at a time when the housing industry was still struggling to recover.