United States banks need to raise further $120 billion under new Fed rules

"Requiring GSIBs to hold sufficient amounts of long-term debt, which can be converted to equity during resolution, would facilitate this by providing a source of private capital to support the firms' critical operations during resolution", the Fed stated.

The other banks subject to the requirements are Goldman Sachs, Wells Fargo, Morgan Stanley, Bank of New York Mellon and State Street Bank.

US regulators won the power under the 2010 financial overhaul law to seize and dismantle big banks and financial firms that could topple and jeopardize the broader system.

The Fed proposal, set for a vote Friday, sets a minimum "total loss-absorbing capacity", or TLAC, for the firms, which would include a combination of shareholder equity and debt that would serve as lines of defense in the event of a crisis.

The idea is that the cost of a huge bank's failure would fall on investors in the bank's equity or debt, not on taxpayers. JPMorgan has more than $2 trillion in total assets, making it the largest USA bank by that measure.

The eight banks are identified by the Fed as "global systemically important banks", and the new rules would reduce the "systemic impact" of the potential failure of one of those banks.

Banks will need a debt and a capital cushion equal to 16 percent of risk-weighted assets by 2019 and 18 percent by 2022. As a results, in the weeks leading up to the gathering, each new release of fresh economic data - and there are many on the calendar, including two jobs reports - will be a catalyst for the return of higher market volatility. Analysts estimated that Goldman Sachs and Morgan Stanley already have issued enough debt to meet the rule. But the Fed noted that losses might have been higher in the last crisis had the government not shored up the system - and there may be less assistance in the next bust.

According to the Fed, the new rule would allow for an orderly resolution process should one of the eight bank's fail. Fed officials declined to say which banks those were.

The premise behind the rule is that if a large, complicated bank-holding company composed of many smaller banking units suffered large losses and failed, the situation could be resolved simply and safely by having the bank share necessary losses could between its parent company's owners and the holders of its long-term debt.

Also announced Friday was a draft final rule establishing minimum margin requirements for swaps that are not cleared through an exchange.