The Fed Plans to Let a Bank Capital Rule Expire. Here's Why It's Important.
Regulators plan to let an exclusion on bank capital rules that was implemented early in the pandemic expire at the end of the month, which could trigger further volatility in the bond market. The rule could hurt some bank stocks as well.
The exclusion had to do with a bank capital requirement related to a metric called the supplementary leverage ratio (SLR). Banks were required to maintain a certain amount of capital for their total balance sheet and off-balance sheet exposure. But when bank balance sheets exploded early in 2020, regulators allowed banks to exclude deposits held at the Federal Reserve and U.S. treasury notes from their total leverage exposure.
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Source Fool.com
