From Yahoo Finance: 2025-06-01 10:00:00

US regulators are considering easing a key requirement for banks to boost liquidity in the Treasury market and reduce long-term borrowing rates. The move would adjust the supplemental leverage ratio, which bankers argue discourages trading against Treasury investments. JPMorgan CEO Jamie Dimon predicts a bond market crack, urging reforms to ease market stress.

The $30 trillion US Treasury market faces liquidity concerns amidst COVID-19 and rising debt worries. Bessent aims to reset capital rules for banks to add more Treasurys, alleviating upward pressure on Treasury yields. Goldman Sachs CEO supports the change, emphasizing its benefits. Federal Reserve Chair Powell also backs easing the rule.

Banks hope for changes beyond the leverage ratio, arguing that stringent capital requirements hinder lending profitability. Powell and Fed governor Bowman advocate for SLR reform to improve market functioning. Critics warn of risks in allowing banks to hold more Treasurys, citing past failures during rate spikes. Governor Bowman believes addressing the issue is crucial before future market stresses emerge.



Read more at Yahoo Finance: Why Scott Bessent wants to make it easier for banks to own Treasurys