US regulators are considering easing capital requirements for major banks to enhance liquidity.

From Nasdaq: 2025-06-19 13:13:00

U.S. regulators plan to ease capital requirements for major banks like JPMorgan Chase, Goldman Sachs, Morgan Stanley, and Wells Fargo. The proposal aims to lower the supplementary leverage ratio by up to 1.5 percentage points, enhancing liquidity in the U.S. Treasury market.

Currently, U.S. banks must hold at least 3% of their total exposures, with an additional 2% for the largest global banks. The proposed adjustment would reduce the capital requirement under the SLR for bank holding companies from 5% to a range of 3.5% to 4.5%.

Fed Chair Jerome Powell believes strict capital rules may limit banks from trading Treasuries during volatility. The proposal could benefit banks by reducing capital reserves, allowing for more lending and Treasury trading. However, the impact on bank profitability and regulatory reforms remains to be seen.

Lower capital buffers could enhance bank profitability by freeing up funds for investment. Major banks like JPMorgan, Morgan Stanley, and Wells Fargo currently have Zacks Rank #3, while Goldman Sachs holds a Zacks Rank #4. The proposed changes could provide more flexibility for banks to expand operations.

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Read more at Nasdaq: US Regulators Mull Easing Banks’ Capital Rule on Treasury Trades