WASHINGTON–Federal regulators this week are expected to rollback capital rules put in place following the 2008 financial crisis, a move that has brought criticism from at least one senator.
The Federal Reserve today will consider reducing what is known as the enhanced supplementary leverage ratio (eSLR), a rule that calls for the largest U.S. banks to hold additional minimum capital based solely on their size.
On Thursday, the FDIC is also expected to discuss a similar proposal.
Under current rules, the biggest U.S. banks, including JPMorgan Chase, BofA and Morgan Stanley, must keep their eSLR ratios at 5%. The proposal being considered by regulators would lower that requirement by 1.5 percentage points, according to a Bloomberg report.
Supporters of the change to the key capital ratio say it is designed to make it easier for banks to lend freely and to create an even bigger pool of buyers for U.S. Treasurys during a period where there is rising concern over foreign demand for US debt.
Support from Treasury Secretary
Treasury Secretary Scott Bessent has previously indicated regulators will ease the rule.
New Fed Vice Chairman Michelle Bowman said earlier this week that revisiting the eSLR requirement is just the start of broader capital rollback considerations.
Objections from Senator
Meanwhile, Sen. Elizabeth Warren (D-MA) was critical of the change, saying the rule is a “critical safeguard” that promotes financial stability.
