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U.S. Banks Face Tougher Leverage Ratio

Supplemental leverage ratio rule adopted today applies to eight large banks; their borrowing power is more strictly limited than is their overseas competitors'.

By Jesse Hamilton | Updated on April 08, 2014

The biggest U.S. banks will face greater restrictions on their borrowing power than their overseas competitors under supplemental leverage ratio rules adopted by regulators in Washington today.

Eight lenders, including JPMorgan Chase & Co. and Bank of America Corp., are required to keep loss-absorbing capital equivalent to at least 5 percent of total assets, under the rules designed to curtail risk in the financial system. The requirement approved by the Federal Deposit Insurance Corp. (FDIC) and Office of the Comptroller of the Currency (OCC)—and set for a Federal Reserve vote today—surpasses the 3 percent minimum set in a global agreement by the Basel Committee on Banking Supervision.

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