Regulators extend comment deadline for leverage ratio proposal

WASHINGTON — The Federal Reserve Board and Office of the Comptroller of the Currency are extending the comment deadline for a proposal to adjust a key capital measure for large banks.

The Fed and OCC issued their proposal last month to change the enhanced Supplementary Leverage Ratio, or eSLR, from a fixed ratio applied to all global systemically important banks to a variable ratio based in part on banks’ G-SIB capital surcharge. The regulator extended the comment period from May 21 to June 25 amid concerns that stakeholders need more time.

Andrew Harrer/Bloomberg

The federal bank regulators have been divided over the proposal. Fed Gov. Lael Brainard voted against the plan, saying it was inconsistent with the current climate. The Federal Deposit Insurance Corp. also withheld support, with FDIC Chairman Martin Gruenberg saying the proposal would require big banks to hold $121 billion less in Tier 1 capital. Their views were echoed by former FDIC Chairman Sheila Bair and Thomas Hoenig, the agency's former vice chairman.

But backers of the plan say those concerns are unfounded. Fed Vice Chairman for Supervision Randal Quarles suggested in a speech earlier this month that the total capital reductions at the bank holding company level would be far less, on the order of about $400 million across all eight holding companies. Stakeholders are at odds about which figure more closely represents the actual release of capital, and the subject is likely to be at the heart of many comments the agency will receive.