General Discussion

and harmful economic things from happening...

The Trump administration is preparing to roll back a key financial safeguard imposed after the 2008 crisis, in a move expected to benefit major Wall Street banks, Politico reported Saturday, citing people familiar with the matter. Regulators appointed under President Donald Trump are finalizing a proposal that would reduce the amount of capital large banks must hold to protect against financial shocks.

The forthcoming proposal, developed collaboratively by the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), is anticipated to be unveiled in the coming months.

At the center of the debate is the supplementary leverage ratio, a requirement that compels banks to hold a minimum level of capital based on their total assets, regardless of risk. Critics of the rule, including some Republican officials and industry advocates, argue it discourages banks from holding safe assets like U.S. Treasuries, thereby limiting liquidity in government debt markets.

Treasury Secretary Scott Bessent has made reducing capital requirements a top policy goal. He has pointed to the recent turnover in regulatory leadership following the 2024 election as a key driver for advancing this shift, suggesting that financial institutions now have a clearer path to influence regulatory outcomes. Bessent also emphasized that easing the SLR could help lower interest rates by making it easier for banks to participate in the Treasury market. Etc.