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Regulators Mull Softening “Supplementary Leverage Ratio,” Banks Expect Relief

Left 36% Center coverage: 11 sources Right

Washington, D.C., USA

May 20, 2025 3 Neutral General

Washington, D.C., USA: The Federal Reserve and other regulators are considering lowering the supplementary leverage ratio (SLR), a key post-2008 rule requiring banks to hold a certain capital buffer. Proponents say adjusting the SLR would free up trillions in liquidity for the Treasury market. Critics argue it might weaken financial stability. Treasury Secretary Scott Bessent calls it a “high priority,” though details remain under review.

What this means for you:

•	Looser capital rules could spur more bank lending, potentially improving access to loans—though not guaranteed.
•	If you hold bank stocks, watch for changes in dividend or buyback policies if capital is freed.
•	Treasury yields might shift if banks buy more government bonds.
•	Some economists warn about moral hazard—less capital can mean bigger taxpayer risk in crises.

Key Entities

• Federal Reserve, FDIC, OCC: U.S. regulatory bodies overseeing capital rules.
• Debating a revision to the SLR.
• Treasury Secretary Scott Bessent: Urges reevaluation to ease bond market strains.
• Big Banks: Eager for relief to allocate capital more freely.
• Fitch, S&P, Moody’s: Watchful of changes, especially after U.S. credit downgrades.

Bias Distribution

Left: 36% (4 sources)

Center: 36% (4 sources)

Right: 27% (3 sources)

Multi-Perspective Analysis

Left-Leaning View

Cautions that weaker capital buffers invite greater systemic risk.

Centrist View

Sees the measure as a balance between market liquidity and prudent oversight.

Right-Leaning View

Typically favors deregulation, boosting bank competitiveness and market flexibility.

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