Tags in this story
Big banks, capital, capital requirements, economics, Federal Reserve, Federal Reserve, finance, Jamie Dimon, Jamie Dimon
On March 19, 2021, the Federal Reserve Board of the United States issued a press release detailing the circumstances under which the temporary supplementary leverage ratio easement will expire as scheduled. Since the outbreak of Covid-19, Bank of America will no longer have the previously relaxed capital requirements.
In the first week of March, Fed members got rid of concerns about inflation and bond market instability. Recently, Federal Reserve Chairman Jerome Powell (Jerome Powell) explained that he sees Bitcoin as an alternative to gold. Now, analysts and economists believe that the Fed may face some different problems because the U.S. Central Bank will end the Supplementary Leverage Ratio (SLR) easing policy invoked in April 2020.
“[The] The Federal Reserve announced temporary changes to its supplementary leverage ratio rules to ease the pressure on the Treasury bond market caused by the coronavirus and improve the ability of banking organizations to provide credit to households and businesses. “
Relaxed rules to supplement leverage ratios mean that banks can exclude certain items from capital exposures such as cash and bonds on their balance sheets. This ruling is completely different from what was said in 2013, when the former chairman Ben Bernanke wanted to “maintain a solid capital position.” When the Fed relaxed its support for the SLR in April 2020, the central bank and major financial institutions received a lot of criticism from the media and economists.
Bank failure will seriously damage the economy. Without transparency, the importance of bank capital will be thrown aside. Major Wall Street banking institutions tried to get US regulators to expand the scope of SLR protection, but they were ultimately rejected.
CNN business writer Matt Egan called the SLR measure “the’get out of prison’ card for big banks.” Then on March 19, 2021, the Federal Reserve announced the termination of SLR regulations starting last year.
“The Federal Banking Regulatory Agency announced today that the temporary changes to the supplementary leverage ratio or SLR issued on May 15, 2020 for depository institutions will expire on March 31, 2021 as scheduled,” the press release details. “The temporary change is to give depository institutions the flexibility to provide credit to households and businesses in response to the Covid-19 incident.”
A recent report published by Bloomberg’s Peter Coy stated that the American billionaire businessman and JP Morgan Chase CEO Jamie Dimon felt “the end of the temporary change” Not satisfied”. Kuy also pointed out that after Dimon revealed his earnings call summary on January 15th, he “may soon refuse deposits”.
Because of the opening of money supply channels at the same time as the establishment of capital requirements easements, banks have a large amount of liquidity. Coy pointed out that this is a “strange problem.” “JP Morgan Chase and other large banks have acquired more assets than they want.”
What is your opinion on the supplementary leverage ratio easement that ended on March 31? Let us know your thoughts on this topic in the comments section below.
Picture Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for reference only. It is not a direct offer or solicitation of an offer, nor is it a recommendation or endorsement of any product, service or company. Bitcoin.com does not provide investment, tax, legal or accounting advice. The company or the author shall not bear any direct or indirect responsibility for any damage or loss caused or allegedly caused by using or relying on any content, goods or services mentioned in this article or related thereto.