Elizabeth Warren blasts regulators' potential bank leverage-rule changes

Boston Globe

5 days ago

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Warren said the economy already faces risks from President Donald Trump's 'chaotic tariff policies.' In April, Trump's tariffs rattled the markets, sharpening investors' focus on the standards.
The Fed received the letter and plans to respond, according to a spokesperson. Representatives for the OCC and FDIC declined to comment.
The plan is expected to lower a bank holding company's capital requirement under the eSLR to a range of 3.5 percent to 4.5 percent, down from the current 5 percent. The firms' banking subsidiaries would also likely see their requirement reduced to the same range, down from the current 6 percent.
The Fed's plan would ask for comments on whether the agencies should carve out Treasuries and other assets from the leverage ratio calculation.
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Bowman said earlier this month that leverage ratios are intended to act as a 'backstop' to risk-based capital requirements and when it becomes the binding constraint at an excessive level it can lead to market distortions.
Fed Chair Jerome Powell has supported possible revisions to the supplementary leverage ratio standards and in February told lawmakers that he had been 'somewhat concerned about the levels of liquidity in the Treasury market' for a long time.
Warren said Treasuries are not completely free of risk and banks should not be permitted to finance those investments with unlimited leverage.
'Banks' own actions, and a clear record of evidence, demonstrate that concerns over a strong eSLR are more related to big banks' ability to make payouts to shareholders and executives than their ability to act as a source of strength to the economy during periods of stress,' the Massachusetts Democrat said.