Major Regulatory Change on the Horizon

In a significant policy shift, United States regulators are preparing to ease a pivotal bank capital rule, marking the most substantial adjustment in over a decade. This move, as reported by the Financial Times, could redefine the banking landscape post the 2008 financial crisis.

What's Changing?

The US Federal Reserve, alongside the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency, is targeting the supplementary leverage ratio (SLR). This rule, a post-crisis safeguard, mandates banks to maintain a fixed capital reserve against all assets, including those deemed safer.

Potential Exclusions and Timeline

Officials are deliberating the exclusion of low-risk assets such as Treasuries and central bank deposits from the SLR requirements, a measure previously implemented during the COVID-19 pandemic. A formal proposal outlining these changes is anticipated by summer, signaling a new direction in financial regulation.