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US Regulators Propose Easing Leverage Ratios for Major Banks to Boost Treasury Market Liquidity

US Regulators Propose Easing Leverage Ratios for Major Banks to Boost Treasury Market Liquidity

Published:
2025-06-18 07:01:01
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Federal regulators are moving to relax capital requirements for America''s largest financial institutions, a shift aimed at enhancing liquidity in the $29 trillion Treasury market. The proposed adjustments WOULD lower the supplementary leverage ratio (SLR) for bank holding companies from 5% to a range of 3.5%-4.5%, with subsidiary banks seeing similar reductions from their current 6% threshold.

Fed Chair Jerome Powell has publicly supported modifying SLR standards, telling Congress in February that Treasury market liquidity concerns persist. The revisions mirror 2018 changes under the TRUMP administration, which sought to tailor requirements for globally systemic banks. Notably, regulators appear focused on adjusting the overall ratio rather than excluding specific assets like Treasuries—though they may solicit public comment on potential exclusions.

The changes primarily affect Wall Street giants including JPMorgan Chase, Goldman Sachs, and Morgan Stanley. Market participants view this as regulators attempting to strike a balance between financial stability and banks'' capacity to facilitate Treasury market transactions.

|Square

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