The Trump administration is set to unveil a proposal to relax rules on big banks’ capital requirements, a move expected to boost Wall Street and ease regulatory pressure on megabanks. The plan, developed by the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation, aims to reduce the supplementary leverage ratio, a safeguard that requires banks to maintain a minimum level of capital based on their assets.
The move comes as the banking industry sees itself regaining momentum after being closely scrutinized since the 2008 financial meltdown. The plan has been years in the making and represents a significant shift from last year’s Biden-era regulators’ push to increase bank capital requirements.
Industry groups and Republican lawmakers have argued that the requirement constrains bank activity, particularly in buying and selling U.S. Treasuries. The administration claims the easing will boost the Treasury market by allowing banks to facilitate more transactions, which could help lower interest rates.
Regulators are now debating whether to adjust the formula or reinstate a pandemic-era relief that excludes safe assets from the calculation. Critics, including progressive groups and Wall Street critics, argue the plan increases financial stability risks at the expense of big banks.
The exact impact on capital levels is unclear, but industry experts expect it will boost demand for Treasuries slightly. While this might help the administration’s goal of lowering interest rates, it may not be enough to overcome concerns about rising U.S. deficits and decreased foreign investor appetite.
Source: https://www.politico.com/news/2025/05/31/trump-administration-prepares-to-ease-big-bank-rules-00377347