Building In this analysis, we build on our assessment of provisions in H.R. 10 dealing with the broad systemic regulation and resolution framework to focus on the regulatory trade-off proposed in the House-passed legislation. The bill provides an “off-ramp” not only from many post-crisis rules, but also still more generally from the longstanding prudential framework for banking organizations that, if they are complex, meet a ten percent leverage ratio (LR) or, if they meet the bill’s definition of a traditional bank, a six percent LR. The bill defines the LR for complex banking organizations as is currently done, making it a costly “toll” for the largest U.S. banks. However, any action taken in response to Treasury’s proposed LR changes could preserve the structure of the Hensarling bill while also sharply decreasing this cost.
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