(Reuters) -U.S. regulators have agreed on the terms to ease a set of capital requirements that could potentially allow banks to hold more Treasuries, Bloomberg News reported on Tuesday, citing people familiar with the matter.
Officials from the Federal Reserve and other agencies recently submitted a final plan for a key capital reserve ratio to the White House for review, according to the report.
The Fed had voted in June to advance a plan to reform the so-called “enhanced supplementary leverage ratio” so that the amount of capital banks must set aside is directly tied to how large a role each firm plays in the global financial system.
The supplementary leverage ratio requires banks to hold capital against all assets equally, including low-risk U.S. Treasuries, an approach critics said could discourage banks from holding government debt and limit their role in key funding markets.
The banking industry has pushed for relief from the rule for years, arguing it unnecessarily impedes their activities and discourages them from facilitating trading in lower-risk assets such as Treasury bonds.
While the final timeline for votes by the agencies may change, officials are targeting to formally adopt the measure in coming weeks, pending White House sign off, the Bloomberg report said.
The Federal Reserve declined to comment on a Reuters request, while the Federal Deposit Insurance Corp and the Office of the Comptroller of the Currency did not immediately respond.
If implemented, the change would mark a significant win for the deregulatory agenda helmed by the Fed’s new top regulatory official, Vice Chair for Supervision Michelle Bowman.
(Reporting by Ateev Bhandari in Bengaluru; Editing by Shilpi Majumdar)
Comments