Federal Reserve Capital Ratio Exclusion Rule – Beurs.nl
The Fed removes the capital ratio exclusion rule
Friday 19 March 2021 3:45 PM
(ABM FN-Dow Jones) The Federal Reserve will remove an exception for calculating the capital ratio for banks starting April 1, as was also planned. The US central bank announced this on Friday.
The rule of exclusion, according to which the largest banks in the United States was allowed to exclude bonds and deposits from the so-called complementary leverage ratio account, was created last year due to the turmoil in the market due to the Corona crisis.
The Fed said Friday that banks are in strong capital position, so an extension is not necessary. The central bank is open to long-term changes around the SLR.
The market has been watching the central bank’s decision on the exclusionary rule for some time. This could also lead to large banks selling Treasury notes.
US bank stocks were in the red zone sharply after the Fed’s decision. Goldman Sachs, Morgan Stanley and Wells Fargo each lost about 2 percent, while Bank of America and JP Morgan were forced to give up 3 to 4 percent.
ABM Financial News; [email protected]; Revised text: +31 (0) 20 26 28999.
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