Jun 18, 01:06 AM

US Regulators to Cut Supplementary Leverage Ratio by Up to 1.5 Points for Largest Banks Ahead of June 25 Fed Meeting

Top U.S. bank regulators, including the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), plan to propose a reduction in the enhanced supplementary leverage ratio (eSLR) for the largest banks. The current 5% capital buffer is expected to be lowered to a range between 3.5% and 4.5%, a cut of up to 1.5 percentage points. This move aims to address concerns that the existing capital rule has limited banks' ability to trade in the $29 trillion U.S. Treasury market. The easing of this capital requirement is intended to enable major lenders such as JPMorgan Chase, Bank of America, Goldman Sachs, Morgan Stanley, Citigroup, U.S. Bancorp, and Wells Fargo to hold more Treasuries and increase their trading capacity. The Federal Reserve is scheduled to meet on June 25 to consider these changes, marking the start of a broader review of bank regulations. Market participants anticipate that this adjustment could help banks play a greater role in absorbing the large future supply of Treasury securities, potentially impacting liquidity in Treasury auctions. However, some analysts note that banks might favor buying more Treasury bills over bonds, which could generate more income with less risk but may not fully support Treasury financing needs. This regulatory proposal comes as banks prepare for upcoming stress-test results and ongoing debates about financial sector reforms.

#Federal Deposit Insurance Corporation #FDIC #OCC #JPMorgan Chase #Bank of America #Goldman Sachs #Morgan Stanley #Citigroup #Wells Fargo #Treasuries #Federal Reserve #Treasury

Written with ChatGPT (GPT-4).

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US Regulators to Cut Supplementary Leverage Ratio by Up to 1.5 Points for Largest Banks Ahead of June 25 Fed Meeting

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