While stress testing can provide valuable insight into the strength and resilience of our financial system, regulators are increasingly acknowledging shortcomings in the post-crisis regime.
In times of economic stress, customers tend to flood the U.S. banking system with deposits. But the leverage ratio penalizes banks for conducting this core banking function.
Over the past two years, regulators have issued several proposals as part of efforts to make capital rules simpler, but the initiative should be more streamlined and allow more public input.