Federal Reserve Temporarily Eases Capital Requirement for Big Banks
(Worthy News) – The Federal Reserve is temporarily relaxing a rule that imposes additional capital requirements on deposits and Treasury securities held by the biggest U.S. banks.
The supplementary leverage ratio, or SLR, requires banks to hold an extra buffer of high-quality capital against a bank’s total assets (including derivatives exposure and off-balance sheet transactions). Under the Fed’s new rule, banks’ Treasury securities and deposits with Federal Reserve Banks won’t count toward those assets.
“Liquidity conditions in Treasury markets have deteriorated rapidly, and financial institutions are receiving significant inflows of customer deposits along with increased reserve levels,” the Fed said in its announcement. “The regulatory restrictions that accompany this balance sheet growth may constrain the firms’ ability to continue to serve as financial intermediaries and to provide credit to households and businesses. The change to the supplementary leverage ratio will mitigate the effects of those restrictions and better enable firms to support the economy.” [ Source: Barrons (Read More…) ]
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