US regulators have agreed to loosen a core banking capital rule tied to US sovereign bonds, giving the country’s biggest banks more room to lend and to take on Treasury activity without getting hit by steep leverage penalties.
The Federal Deposit Insurance Corpporation (FDIC) has proposed trimming the collective loan repayment ratio from 9% to 8% and shortening the uncertainty window from four quarters to two.
It’s part of a broader move to lighten capital treatment of Treasuries.
Bloomberg reported that regulators reached consensus on the plan and sent the final package to the White House for review.
The shift centers on the enhanced Supplementary Leverage Ratio, a Basel III measure that forces major banks to hold capital against all assets, including low risk US Treasuries.
JPMorgan, Bank of America, Goldman Sachs, and Morgan Stanley would all benefit under the new design.
The Fed had already cleared a proposal to remake the enhanced SLR so capital requirements scale with each firm’s systemic footprint.
Back in June 2025, it unveiled a plan to cut total capital demands for GSIBs by roughly 1.4% or $13 bn – and by as much as 27% or $213 bn for their depository subsidiaries. The fixed 2% SLR buffer would be replaced by one equal to half each bank’s GSIB surcharge.
50 largest U.S. banks collectively saw a $128 bn drop in aggregate assets during 2024-2025, with 28 institutions posting declines. These banks $637.3 bn increase 2023.
If the revised framework is adopted in the coming weeks, big banks gain far more flexibility.
JPMorgan, Goldman Sachs, and Morgan Stanley would be able to expand lending, ramp up Treasury trading, and provide liquidity in stressed markets without running into hard leverage caps.
Lower capital buffers also free up balance sheet capacity for growth and could boost returns.
The industry has pressed for SLR relief for years. Banks argue that treating all assets equally – even US Treasuries – discourages them from holding government debt and limits their ability to support key funding markets. Regulators now appear ready to recalibrate that approach.
The final agency votes could still shift, but officials are pushing to adopt the changes once the White House signs off.
The Fed declined to comment, and neither the FDIC nor the OCC responded to inquiries. If implemented, the move would be a major win for Vice Chair for Supervision Michelle Bowman, who has been leading the Fed’s deregulatory pivot.
