Federal Reserve Plans to Ease Bank Leverage Requirements

By Pete Schroeder

WASHINGTON (Reuters) – The Federal Reserve will consider plans to ease leverage requirements on larger banks at a meeting later this month, starting a broad review of bank regulations.

The U.S. central bank announced the board meeting scheduled for June 25 to discuss changes to the “supplementary leverage ratio,” which mandates banks to hold capital against assets regardless of risk.

This meeting follows Fed Governor Michelle Bowman’s confirmation as the top regulatory official and is expected to initiate several rule-easing initiatives, as Bowman, nominated by President Donald Trump, aims to overhaul the regulation of major banks.

While details on the proposed changes were not provided, banks have long requested revisions to the supplementary leverage ratio. They seek exemptions for traditionally safe assets or alterations to the calculation formula.

The banking sector argues that this requirement was intended to be a baseline capital measure, but has evolved into a significant limitation on lending capabilities, hindering their roles in Treasury markets during stressful periods.