“Regulators made some real progress last year attacking the risks of too-big-to-fail banks. The Volcker Rule and other Dodd-Frank reforms were completed, and, perhaps even more important, three big regulators devised a proposal for tougher capital rules intended to ensure that banks would never require a government bailout when their risky bets went bad. 

“But action on that last crucial bit of business has ground to a halt. Officials at the Federal Deposit Insurance Corporation had hoped that the rule they proposed last July along with the Federal Reserve Board and the Comptroller of the Currency would be set in stone by the end of the year. It was not. 

“It is unclear why. But last month, Bloomberg News reported that unnamed Fed officials were suggesting that approval of the proposed leverage ratio be put off until overseas regulators agreed to a framework that would apply to their nations’ banks as well.

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“Leverage ratios at large foreign institutions are even lower. As of the second quarter of 2013, a group of the 16 largest overseas banks had an average leverage ratio of 3.86 percent. Clearly, foreign banks would have to add much more capital if they had to meet the more stringent American ratio rule.

“There may be another reason that overseas institutions and their regulators don’t like the idea of United States banks being better capitalized under the new rule. Dennis M. Kelleher, president of Better Markets, a nonpartisan group that promotes sound banking practices, said that if American regulators didn’t have to worry about their own institutions failing in a crisis, they wouldn’t feel compelled to rescue overseas banks, as they did in 2008.”

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