The Proposed Leverage Ratio Rule

Published on:
October 21, 2013

SIFMA, the American Bankers Association (ABA), and the Financial Services Roundtable (FSR) provide comments to the Board of Governors of the Federal Reserve System (Federal Reserve), Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) (collectively, the Agenices), on the Agencies’ proposal, Regulatory Capital, Enhanced Supplementary Leverage Ratio Standards for Certain Bank Holding Companies and their Subsidiary Insured Depository Institutions.

The U.S. Proposal would require a supplementary leverage ratio (SLR) surcharge of Tier 1 capital on eight U.S. bank holding companies (Covered BHCs) identified as global systemically important banks (G-SIBs) and their insured depository institutions (IDIs). The U.S. Proposal would require a Covered BHC’s IDI subsidiaries to maintain a Basel III SLR of at least 6% to be considered well-capitalized under the prompt corrective action framework. In addition, Covered BHCs would be subject to a leverage ratio of 5% (3% minimum plus 2% buffer).

The Associations share very serious concerns about the timing and substance of the U.S. Proposal, and the negative consequences that will arise if the proposal is finalized in its current form.

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