US Regulators Reach Consensus on Relaxing Key Bank Capital Rule

Core Insights - U.S. financial regulators have reached a consensus on a plan to relax capital requirements for major banks, including JPMorgan Chase, Bank of America, Goldman Sachs, and Morgan Stanley, with the proposal now sent to the White House for review [1][2][6] Proposed Plan Details - The plan involves adjustments to the enhanced Supplementary Leverage Ratio (SLR), a key component of the Basel III capital framework, which dictates capital holdings against assets for major financial institutions [2][3] - The Federal Reserve's proposal aims to reduce total capital requirements for Global Systemically Important Banks (GSIBs) by 1.4% (approximately $13 billion) and by up to 27% (around $213 billion) for their depository subsidiaries [3] Impact on Banks - The easing of capital requirements is expected to provide banks like JPMorgan, Goldman Sachs, and Morgan Stanley with greater flexibility to expand operations, particularly in lending and Treasury trading [4][6] - Lower capital buffers may enhance banks' profitability by freeing up funds for investment or business expansion, while still maintaining adequate capital for financial stability [5]