Agency Of Income
  • World News
  • Stocks
  • Business
  • Politics

Agency Of Income

  • World News
  • Stocks
  • Business
  • Politics
Business

Divided Fed proposes rule to ease capital requirements for big Wall Street banks

by admin June 26, 2025
June 26, 2025
Divided Fed proposes rule to ease capital requirements for big Wall Street banks

The Federal Reserve on Wednesday proposed easing a key capital rule that banks say has limited their ability to operate, drawing dissent from at least two officials who say the move could undermine important safeguards.

Known as the enhanced supplementary leverage ratio, the measure regulates the quantity and quality of capital banks should be keeping on their balance sheets. The rule emanated from a post-financial crisis effort to ensure the stability of the nation’s largest banks.

However, in recent years as bank reserves have built and concerns have grown over Treasury market liquidity, Wall Street executives and Fed officials have pushed to roll back the requirements. The regulations targeted treat all capital the same.

“This stark increase in the amount of relatively safe and low-risk assets on bank balance sheets over the past decade or so has resulted in the leverage ratio becoming more binding,” Fed Chair Jerome Powell said in a statement. “Based on this experience, it is prudent for us to reconsider our original approach.”

The Fed board put the proposal open for a 60-day public comment window.

In its draft form, the measure would call for reducing the top-tier capital big banks must hold by 1.4%, or some $13 billion, for holding companies. Subsidiaries would see a larger drop, of $210 billion, which would still be held by the parent bank. The standard applies the same rules to so-called globally systemic important banks as well as their subsidiaries.

The rule would lower capital requirements to range of 3.5% to 4.5% from the current 5%, with subsidiaries put in the same range from a previous level of 6%.

Current Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller released statements supporting the changes.

“The proposal will help to build resilience in U.S. Treasury markets, reducing the likelihood of market dysfunction and the need for the Federal Reserve to intervene in a future stress event,” Bowman stated. “We should be proactive in addressing the unintended consequences of bank regulation, including the bindingness of the eSLR, while ensuring the framework continues to promote safety, soundness, and financial stability.”

On the whole, the plan seeks to loosen up banks to take on more lower-risk inventory such as Treasurys, which are now treated essentially the same as high-yield bonds for capital purposes. Fed regulators essentially are looking for the capital requirements to serve as a safety net rather than a bind on activity.

However, Governors Adriana Kugler and Michael Barr, the former vice chair of supervision, said they would oppose the move.

“Even if some further Treasury market intermediation were to occur in normal times, this proposal is unlikely to help in times of stress,” Barr said in a separate statement. “In short, firms will likely use the proposal to distribute capital to shareholders and engage in the highest return activities available to them, rather than to meaningfully increase Treasury intermediation.”

The leverage ratio has come under criticism for essentially penalizing banks for holding Treasurys. Official documents released Wednesday say the new regulations align with so-called Basel standards, which set standards for banks globally.

This post appeared first on NBC NEWS

previous post
Rubio cracks up at Trump’s reaction to NATO leader calling president ‘daddy’
next post
Bumble shares jump 26% as dating company plans to axe 30% of workforce

Related Posts

OpenAI to release web browser in challenge to...

July 10, 2025

Procter & Gamble to cut 7,000 jobs as...

June 6, 2025

Microsoft laying off about 9,000 employees in latest...

July 3, 2025

U.S. foreign tax bill sends jitters across Wall...

June 2, 2025

Starbucks moves to the next phase in its...

June 17, 2025

Byron Allen puts broadcast TV stations up for...

June 3, 2025

Tariffs and weaker beer demand are weighing on...

July 3, 2025

JPMorgan marks 1,000th branch opening since 2018 expansion...

August 1, 2025

OpenAI tops 3 million paying business users, launches...

June 5, 2025

Ontario cancels internet deal with Musk’s Starlink as...

July 31, 2025

    Get free access to all of the retirement secrets and income strategies from our experts!

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest News

    • Senate Republicans reveal dramatic dealmaking behind Trump’s $3.3T megabill passage

    • Putin ally warns ‘titanic efforts’ are underway to sink Trump summit over Ukraine war

    • Summertime and the living is uneasy on Capitol Hill

    • Zelenskyy thanks NATO, European leaders for backing his push to join Trump‑Putin summit

    • NATO chief says upcoming Trump-Putin meeting will be about ‘testing’ Russian leader

    • MIKE DAVIS: Eric Tung is Trump’s pick to bring sanity to the Ninth Circuit

    Categories

    • Business (106)
    • Politics (20)
    • Stocks (112)
    • World News (338)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: AgencyOfIncome.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 agencyofincome.com | All Rights Reserved