the chairman of the federal deposit insurance corp said thursday that us regulators are considering a plan to include banks with assets as low as 100 billion in the international regime for capital requirements known as basel iii currently only banks with 250 billion or more in assets fall under the umbrella of basel iii which was set up in the wake of the global financial crisis that erupted in 2008 fdic chairman martin gruenberg said it’s possible that silicon valley bank may not have failed if it fell under basel iii rules while the bank’s collapse in march came after a liquidity crunch and a run on deposits the loss of public confidence that took place before the fatal run was prompted its sale of securities at a loss to cover withdrawals this in turn has raised questions about the bank’s capital adequacy he said “had the unrealized losses on available for sale securities on the balance sheet of svb that were realized once sold been required to be recognized in capital as the basel iii framework would do it might have averted the loss of market confidence and the liquidity run” gruenberg said in a speech at the peterson institute “that is because there would have been more capital held against these assets” gruenberg said the silicon valley bank bust showed that banks of 100 billion to 250 billion of assets “can pose genuine financial stability risks and the federal banking agencies need to review carefully the supervision of these institutions particularly for interest rate risk in the current environment and the prudential requirements that apply to them including capital liquidity and loss absorbing resources for resolution” community banks would not be included in the basel iii proposal due to their limited overall size and trading activities he said meanwhile bank stocks fell on thursday with the spdr sp regional banking etf kre down 36 the kbw nasdaq bank index bkx off by 23 and the financial select sector spdr fund xlf down by 1 based on a list published by sp global of the largest 50 us banks by total assets as march 31 18 us banks falling within the range of 100 billion to 250 billion of assets including american express co axp with 236 billion of assets citizens financial group inc cfg with 222 billion in assets first citizens bancshares fcnca with 215 billion fifth third bancorp fitb with 209 billion and mt bank corp mtb with 203 billon on the smaller end of the 18 banks synchrony financial syf has disclosed 108 billion in assets new york community bancorp nycb has 124 billion and northern trust corp ntrs has 151 billion the fdic will issue proposed rulemaking to continue implementing basel iii requirements followed by a comment period and finalization of the rules and a transition period that will last several years while banks have complained that capital requirements will cause banks to lend less and hurt the economy gruenberg said the opposite is true because the moves will strengthen the financial system in times of stress “ensuring adequate amounts of bank capital provides a longterm benefit to the economy by enabling banks to play a countercyclical role during an economic downturn rather than a procyclical one” he said “equity capital funds a bank’s operations is allocated to make loans to local communities and can be distributed to shareholders when appropriate with sound financial performance” the fdic will team up with the federal reserve and the office of the comptroller of the currency to issue a notice of proposed rulemaking “in the near term” he said meanwhile on another regulatory front the department of justice is reviewing its policies regarding bank mergers federal officials have said that consolidation among banks will likely continue but it’s important for the us banking system to remain diverse with healthy community banks regional banks and megabanks while protecting competition