WASHINGTON—Federal regulators are reportedly preparing to significantly ease capital requirements for banks—rules originally put in place to help prevent a repeat of the 2008 financial crisis.
This potential rollback, the most substantial in over a decade, comes amid President Trump’s broader push for deregulation, The Guardian reported.
The banking industry has lobbied hard for the change, with major lenders like JP Morgan and Goldman Sachs arguing that strict capital rules have stifled competition and restricted lending by forcing them to hold excessive assets relative to their liabilities, The Guardian said.
According to the Financial Times, regulators are expected to unveil proposals this summer to reduce the supplementary leverage ratio—a key rule that requires large banks to hold high-quality capital against risky assets such as loans and derivatives. The report cites unnamed sources familiar with the plans.
These capital rules were introduced in the wake of the 2008 financial crisis, aimed at strengthening the banking system and preventing the kind of widespread economic fallout that forced governments to spend billions bailing out overleveraged institutions.
A rollback has been widely anticipated, especially as Donald Trump has pledged a sweeping deregulation agenda in a second term, vowing to eliminate ten regulations for every new one introduced, The Guardian said.