The United States government will prepare to announce a decline in banking regulations which will provide financial institutions with more loose capital requirements.
President Trump's administration is preparing to announce a reduction in the additional lever ratio (SLR) for capital reserves for American banks, the Financial Times (FT) reportsCiting anonymous people familiar with the issue.
The regulators initially implemented the current SLR rules within the framework of Basel III in 2014, aimed at preventing a repetition of the 2008-2009 global financial crisis. But some have argued that the regulations retain the market and the financial industry.
Said Greg Baer, ​​leader of the Bank Policy Institute lobby group,
“The penalty of banks for the holding of low -risk assets such as treasury bills undermines their ability to support the liquidity of the market during stressful periods where it is most necessary … regulators should now act rather than wait for the next event.”
The president of the federal reserve Jerome Powell also said Earlier this year, he thought that reception, the SLR would “strongly” help support the US treasury market.
“We have to work on the structure of the treasury market, and part of this answer may be, and I think it will be the reduction in the calibration of the additional lever report.”
But others do not share the same feeling. Nicolas Véron, principal researcher at the Peterson Institute for International Economics, told the FT which taking into account the current risks for American banks and the role of the dollar and the direction of the economy, it is not the right time to soften capital standards.
Under Basel III, systemic banks (SIB) in the United States are necessary to maintain an additional lever ratio (SLR) of 5% or more at the portfolio company and 6% at the level of the assured deposit institution. Meanwhile, many other developed countries adhere to the minimum SLR of 3% Basel III, although some jurisdictions have proposed or implemented slightly higher standards ranging from 3.5% to 4.25%
FT sources did not specify what the specific SLR percentage regulators aim, but lobbyists say they would like American requirements to be more in line with international standards.
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