Regulators Propose New Rules Requiring Banks to Issue Long-Term Debt to Cushion Against Failures

Regulators plan to require regional banks with over $100 billion in assets to issue long-term debt to protect depositors if they fail.
The rules come after some regional bank collapses raised concerns about emerging risks and aim to shift the burden in bank failures from taxpayers to bondholders.
Banks will need to maintain long-term debt equal to the greater of 6% of risk-weighted assets or 3.5% of total assets.
The rules could moderately raise funding costs for banks, potentially impacting credit availability and economic growth.
Largest banks already face similar requirements, while mid-sized banks will have a transition period before the rules take full effect if finalized.