"Regulators' Proposal: Regional Banks Mandated to Increase Debt for Contingency"

U.S. banking regulators have announced plans to require regional banks with at least $100 billion in assets to issue long-term debt to protect depositors in the event of failures. The move comes after the collapse of Silicon Valley Bank earlier this year highlighted emerging risks in the banking system. The proposal aims to bring measures that apply to the largest institutions down to the level of midsized banks, including raising levels of long-term debt, removing loopholes, and strengthening resolution plans. The FDIC's move could force some lenders to issue more corporate bonds or replace existing funding sources with more expensive forms of long-term debt, potentially squeezing margins. Analysts estimate that five banks may need to raise around $12 billion in fresh debt. The requirement aims to calm depositors during times of distress and reduce costs to the FDIC's Deposit Insurance Fund.