ABA Statement on Enhanced Supplementary Leverage Ratio Proposal

“Today’s proposal from the Federal Reserve and OCC to lower the supplementary leverage ratio for large institutions is an important step toward strengthening our financial system, reducing bank funding costs and allowing institutions to do even more to support the economy without compromising safety and soundness. Importantly, this proposal also invites comment on changing the treatment of U.S. Treasury securities which would increase liquidity in the Treasury market and promote financial stability.  

“This proposal also underscores the broader importance of regulatory tailoring while addressing longstanding issues that have made it harder for our nation’s internationally active banks to compete with their European counterparts. A more risk-sensitive and proportionate approach to capital standards for all banks is essential to maintaining a safe, dynamic and competitive banking system. That includes reducing the Community Bank Leverage Ratio to 8 percent to ensure that community banks can continue using this simplified framework while serving customers and communities across the country. We continue to call for additional leverage ratio reforms, including excluding U.S. Treasury securities from both the Supplementary and Tier 1 Leverage Ratios. 

“We look forward to reviewing today’s proposal and a related proposal expected from the FDIC in detail with our members and sharing our views through the comment process. We urge regulators to move as quickly as possible to finalize these much-needed reforms.”