Core Viewpoint - The Federal Reserve announced plans to relax a key capital regulation, the enhanced supplementary leverage ratio (eSLR), which has been criticized by large banks for limiting their ability to hold more U.S. Treasury securities and act as intermediaries in the $29 trillion market [1][2] Group 1: Regulatory Changes - The proposed changes will lower the capital requirements for bank holding companies from 5% to a range of 3.5% to 4.5%, and for their bank subsidiaries from 6% to the same range [1] - The proposal aims to enhance the resilience of the U.S. Treasury market and reduce the likelihood of market dysfunction, as well as the need for Federal Reserve intervention during future stress events [1][2] Group 2: Industry Reactions - The proposal is seen as a partial victory for banks, which have called for the exclusion of U.S. Treasury securities from eSLR calculations [1] - Critics, including former Treasury officials, question whether relaxing the eSLR will actually encourage banks to purchase more Treasury securities [2] Group 3: Broader Implications - The changes come amid concerns about the resilience of the U.S. Treasury market, especially in light of potential future stress events [3] - Federal Reserve Chairman Jerome Powell supports revising the SLR standards to strengthen banks' roles as intermediaries in the Treasury market [3]