US Prepares Major Bank Capital Rule Rollback

U.S. financial regulators, led by the Federal Reserve, are preparing to significantly reduce bank capital requirements by targeting the supplementary leverage ratio (SLR), a key rule requiring large banks to hold high-quality capital against assets. This move, part of President Trump’s deregulatory agenda, could exempt certain low-risk assets like U.S. Treasuries from SLR calculations and unlock up to $2 trillion in lending capacity. The banking industry has advocated for these changes, arguing current rules restrict lending and market liquidity. Critics caution that such rollbacks during economic uncertainty could heighten systemic risk and undermine financial stability. The reforms represent the most substantial rollback of post-2008 crisis protections and involve the Trump administration and some Fed officials bringing in industry-friendly advisers to shape policy. International observers are concerned that the U.S. may become less resilient compared to markets with stricter rules.