After much internal consternation, the FDIC and OCC have agreed with the Fed and provided temporary relief from the supplementary leverage ratio (SLR) for reserves held at the Fed and direct Treasury obligations.  Although relief is conditional on possible application of capital-distribution restrictions, we expect virtually all state-member and national banks to get pain-free relief.  This will expand leverage capacity by as much as $1.6 trillion – about 10% – but we do not expect it to lead to more mortgage-credit availability.

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