Fed proposes easing leverage ratio rules for large banks

June 25, 2025 11:14 AM PDT | By EODHD

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Fed proposes easing leverage ratio rules for large banks — Image source: Kalkine Media

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Investing.com -- The U.S. Federal Reserve has proposed changes to ease the Enhanced Supplementary Leverage Ratio for large banks, potentially reducing capital requirements significantly. The proposal would cut aggregate Tier 1 capital requirements for Global Systemically Important Banks by 1.4% or $13 billion. More substantially, it would reduce capital requirements for depository institution subsidiaries of global banks by 27% or $213 billion. High Yield Savings Offers Earn 4.10% APY** on balances of $5,000 or more View Offer Earn up to 4.00% APY with Savings Pods View Offer Earn up to 3.80% APY¹ & up to $300 Cash Bonus with Direct Deposit View Offer Powered by Money.com - Yahoo may earn commission from the links above.

Under the new rules, the Fed would replace the current 2% ESLR buffer with a buffer equal to half of each bank’s GSIB surcharge. Similarly, the 3% ESLR buffer for global bank subsidiaries would be replaced with half of each bank’s GSIB surcharge. Fed Chair Jerome Powell stated that reconsidering the rule is prudent "given the stark increase in level of relatively safe assets on bank balance sheets." Fed Vice Chair Michelle Bowman expressed support for the changes, noting they would "build resilience in U.S. Treasury markets" and "reduce market dysfunction." Not all Fed officials agree with the proposed changes. Fed Governors Michael Barr and Adriana Kugler plan to oppose the modifications, according to their prepared statements.

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