Wall Street banks are about $70 billion short in building up funds the Federal Reserve says they’ll need to tap following a collapse, down by almost half from the central bank’s earlier estimates.
The eight biggest U.S. financial firms are required to build cushions of long-term debt that can be transformed into equity in a new company if the old one fails, according to a rule the Fed governors are expected to approve Thursday. Stockpiles of capital will also be used to meet the new standard known as total loss-absorbing capacity, or TLAC, which is a vital component of the plan to make giant banks easier to unwind without taxpayer bailouts. In October 2015, the Fed estimates banks had a total shortfall of $120 billion.