Big banks plead for capital relief. D.C. is listening
By John Heltman
Banks may soon have their best chance in years to push for certain exemptions to regulators’ leverage-based capital rules, even as market critics argue that such changes would be a Wall Street giveaway. …Karen Shaw Petrou, managing partner at Federal Financial Analytics, said that though there appears to be no political impediment to exemptions in the leverage ratio, the proposed exemptions are not equally palatable. Exempting cash in Federal Reserve accounts may be the lowest-hanging fruit, she said, but even that change may have strong opponents among the existing leadership at the Federal Deposit Insurance Corp. and the Fed. “The change on excess reserves — and reserves in general — is the most likely of these changes,” Petrou said. “The broader changes that Treasury proposes, for Treasury obligations and margin, will really depend on the next round of regulators. I’m not sure this Fed or the FDIC would accept them.”