US bank regulator approves relaxed leverage rules

By Pete Schroeder

WASHINGTON (Reuters) -A U.S. slope regulator approved caller last rules aimed astatine easing leverage requirements for banks, requiring firms to acceptable ​aside little superior arsenic a cushion against losses of low-risk assets.

The Federal Deposit Insurance ‌Corporation approved the caller last rules for the "enhanced supplementary leverage ratio," and different slope regulators are expected to ‌similarly o.k. the caller rules, which were archetypal projected successful June.

An FDIC unit memo estimated the caller rules would trim superior wide for ample planetary banks by $13 billion, oregon little than 2%. However, the depository instauration subsidiaries astatine those banks would spot superior requirements autumn by an mean of ⁠27%, oregon $213 billion.‌ Officials person said banks volition not beryllium capable to wage much to shareholders nether the relaxed rule, arsenic the overarching holding companies stay constrained by different ‍capital requirements.

Banks indispensable comply with the caller modular by April 1, but are permitted to voluntarily follow the regularisation arsenic aboriginal arsenic the opening of 2026.

TRUMP ADMINISTRATION AIMS TO SPUR GROWTH

The relaxed request is 1 of the archetypal steps ​by banking regulators to easiness stricter rules and policies enactment successful spot pursuing the planetary fiscal ‌crisis. The Trump medication wants to trim rules to spur economical growth, and regulatory officials person argued the existent requirements person proven excessively onerous and tin hinder slope activities specified arsenic lending. But critics contend that easing safeguards increases fiscal institutions' hazard and is unjustified.

The last regularisation is akin to the 1 proposed, and would necessitate banks to acceptable speech superior against assets based connected however ⁠large a relation each steadfast plays successful the planetary fiscal ​system. Banks had argued the leverage requirement, which sets ​capital requirements unsighted to the riskiness of a definite asset, was meant to service arsenic a backstop but had progressively go binding to slope activities acknowledgment to ‍the accelerated emergence successful authorities ⁠debt successful caller years.

Some authorities officials had disquieted an overly strict request could disincentivize ample banks from facilitating Treasury marketplace trading, peculiarly during times of stress.

The FDIC besides approved a projected ⁠rule that would little leverage requirements for smaller banks. The connection would trim the assemblage slope leverage ratio, which ‌applies to banks with little than $10 cardinal successful assets, from 9% to ‌8%.

(Reporting by Pete SchroederEditing by Rod Nickel)