In this report, we analyze today’s House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit hearing to review the impact of capital and margin requirements on end-users. However, the hearing also assessed other regulations, most notably pending Basel efforts to standardized credit risk-based capital (see FSM Report CAPITAL212), the FRTB (see FSM Report CAPITAL211), and the overall U.S. and global leverage-capital framework. Republican Members focused their questions on the cumulative impact of the post-crisis framework, saying that while specific rules may serve legitimate financial stability purposes, the total amount of all of the new rules and the interactions between new capital rules and margin requirements creates burdensome costs for end-users. Of particular concern is that the leverage ratio does not recognize that customer margin posted to a bank-affiliated clearing member offsets the bank’s actual exposure to clearing houses.
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