The agencies proposed changes to the way they apply a capital backstop to the largest systemically important firms, replacing a static leverage ratio with a more dynamic ratio that takes each bank’s risk profile into account.
In his last major speech as the agency’s No. 2, Thomas Hoenig said it would be a “serious policy mistake” to relax measures such as the supplementary leverage ratio, but he was more open to regulatory relief in other areas.
While regulatory relief legislation would raise the asset threshold for “systemically important” banks, Federal Reserve Chairman Jerome Powell said the central bank could still apply prudential scrutiny to banks below that new cutoff.
Federal Reserve Chair Jerome Powell largely hewed close to his predecessor's positions in his first congressional testimony as the top central banker, but also signaled important changes when it came to paying banks interest on reserves and other topics.