BANKING

Fed Proposes Safeguards to Bolster Bank Reserves: Federal regulators, concerned by a spate of bank failures in recent years and worried about the government’s liabilities, proposed a plan that would force banks to set aside additional capital as a cushion against investments that turn sour. In particular, the Federal Reserve’s plan is meant to ensure that banks have enough capital on reserve to weather losses on investments that swing in relation to interest rates. The plan, which would implement parts of a major 1991 banking law, is designed to reduce the chances of bank failure and limit a drain on the government-run Bank Insurance Fund that protects depositors when a bank goes bust.