On June 27, the OCC, the Fed, and the FDIC issued a notice of proposed rulemaking to revise the enhanced supplementary leverage ratio standards for U.S. global systemically important banks (GSIBs) and their subsidiaries. The agencies are seeking comments on the proposal by August 26.
Under the proposed revisions, the enhanced supplementary leverage ratio (eSLR) buffer for GSIBs would be 50 percent of the bank holding company’s “method 1 surcharge” under the Fed’s risk-based capital surcharge framework. The rule would also align the eSLR standard for bank subsidiaries with a parent GSIB level. The agencies stated the changes are intended to ensure the eSLR serves as a backstop to risk-based capital requirements rather than a regulatory binding constraint. The proposal also seeks comment on potentially excluding certain Treasury securities from the leverage ratio calculation, amends total loss-absorbing capacity and long-term debt requirements to maintain alignment with the revised eSLR, and makes technical corrections to the capital rule.
As previously covered by InfoBytes, Sen. Elizabeth Warren (D-MA), sent a letter to the federal banking agencies on June 23 raising concerns over reports that the prudential regulators intended to ease the enhanced supplementary leverage ratio. She argued eSLRs were a key post-2008 safeguard.
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