"If you keep going and raise capital because of fear of things getting worse beyond what the risks are, you run the risk that banks will not be able to lend as much as they otherwise would to support the economy," Dugan told attendees at the Institute of International Finance conference in Washington.
He said restraining banks from lending during a slowdown could "amplify the recessionary effect."
(Reporting by Saeed Azhar and Lananh Nguyen; editing by Jonathan Oatis)
