Investing.com – The Federal Reserve’s emergency capital relief for big banks, a measure announced last year to contain the Covid-19 damage to the economy, is to end.
The Federal Reserve today said the temporary change to its supplementary leverage ratio, or SLR, for bank holding companies will expire as scheduled on March 31.
To ease strains in the Treasury market resulting from the Covid-19 pandemic and to promote lending to households and businesses, the Board had temporarily modified the SLR last year to exclude U.S. Treasury securities and central bank reserves from capital requirements calculations.
On Friday it said that since that action, the Treasury market has stabilized.
The Fed said it will take appropriate actions to assure that any changes to the SLR don’t erode the overall strength of bank capital requirements.
The SLR was established in 2014 as a backstop capital requirement in the wake of the Great Financial Crisis to stop banks from gaming a system of capital requirements with their own internal risk models.
Source: Economy - investing.com
