They might also wish to hold additional capital if there are concerns about their ability to raise it in future periods. Such justifications for holding capital above regulatory minimums are entirely appropriate, indeed necessary, for determining the appropriate level of capital for an individual institution.
Ideally, an institution should use a systematic process to assess its internal capital needs, one that takes a holistic approach to the firm’s risks and complements its regulatory capital measures. As many of you know, the Federal Reserve has had, for more than five years, a program to foster our largest, most complex banks’ ability to assess internal capital needs.