Wells Fargo, the biggest bank in the US by market capitalization, may have to raise $60 billion in debt to offset potential losses in the event of another financial crisis following a Federal Reserve ruling.
CEO John Stumpf isn't all that keen on the idea.
"I don't think that's something we really needed," Stumpf said in an interview on Tuesday with CNBC's Kayla Tausche.
He said: "It's what we've been asked to do. I think that we have enough capital the way it is, but if loss absorbing capital is required through debt, we're going to raise it. We will be able to manage it. But I can't tell you sitting here that I thought that was necessary."
TLAC
The Fed regulation on "total loss-absorbing capacity," or TLAC, means that banks must have cash on hand to cover writing off 18% or more of "risk-weighted" assets in the event of a loss. That means Wells Fargo will have to add billions to its balance sheet in cash reserves.
The rule also affects Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs Group, JPMorgan Chase, Morgan Stanley, and State Street. It is one of several rules aimed at reducing risk in the banking system.
"By making the failure of even the largest banks more manageable, the proposed regulation will be another important step in solving the too-big-to-fail problem," said Daniel Tarullo, a Fed governor, in a statement in October.
Stumpf isn't the first Wells Fargo executive to sound off on the Federal Reserve's latest requirement, which is particularly onerous for the biggest bank in the US by market capitalization. Last month, Wells Fargo CFO John Shrewsberry called the bank "victims" of the Fed's new rule.
Stumpf was quick to point out that Wells Fargo and other firms have already shored up cash reserves.
"The industry has more than doubled its capital [reserves]," he told Tausche. "We surely have in the last seven years."
