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The Federal Reserve (FED) plans to ease leverage rules, which may release $185 billion in bank capital.
On June 27, Morgan Stanley estimated that The Federal Reserve (FED)'s plan to ease leverage rules could release $185 billion in capital and unlock nearly $6 trillion in balance sheet capacity.
The Federal Reserve previously announced a proposal to revise the capital requirements for large global banks on relatively low-risk assets, in order to boost participation in the U.S. Treasury market. The Federal Reserve approved this plan with a vote of 5 to 2, marking one of the first deregulatory measures possibly to be introduced under the leadership of the new vice chair for supervision, Michael Barr.
The proposal will reform the so-called "enhanced supplementary leverage ratio," linking the amount of capital that banks must set aside directly to the role they play in the global financial system.