At the same time, regulators came to regard capital requirements as a supple prudential tool. As activity and affiliation restrictions were loosened in the United States, capital requirements seemed a promising way to protect the public’s interest in the stability of financial institutions that had access to the Federal Reserve’s discount window and Federal Deposit Insurance Corporation insurance.
Capital requirements promised to provide a buffer against bank losses from any activities in which the bank or its affiliates might engage, a consideration of equal or greater relevance in countries with universal banking models.