Large banks often use greater regulation by the government, particularly the Federal Reserve, as a reason to slow the pace at which they give loans. These banks may be right. When risk factors are curtailed, financial institutions believe their options to deploy money to customers is hampered. And new rules on bank risk are coming. The economy, in need of capital for expansion, may find itself starved instead.

According to The Wall Street Journal:

Financial regulators on Tuesday stated explicitly what they have been signaling for months: More action is needed to reduce risks posed by the nation’s largest banks to the broader economy.

The Federal Reserve outlined a plan for reining in the biggest banks during a meeting in which it unanimously approved a new capital framework for all banks.

While many of the details remain to be decided, officials said they plan to act in the coming months on four proposals aimed at the eight banks dubbed globally “systemically important,” including Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. In sum, the proposals set out for the first time an aggressive new road map for how regulators plan to address persistent criticism they haven’t gone far enough to rein in “too big to fail” banks.

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