Overview

• The Federal Reserve’s board voted 5-2 on June 25 to advance modifications to the enhanced supplementary leverage ratio (eSLR) for public feedback.
• Under the draft rule, bank holding companies’ eSLR requirement would fall from 5% to a range of 3.5%–4.5%, and subsidiaries’ ratio would be cut from 6% to the same band.
• The proposal would tie the leverage requirement to half of each institution’s global systemically important bank surcharge using a Basel-aligned method.
• Rather than exempting U.S. Treasuries and reserve balances, the plan keeps them in the eSLR calculation to ensure banks still hold capital against low-risk assets.
• Supporters including Chair Jerome Powell and Vice Chair Michelle Bowman say the change will bolster Treasury market resilience, while Senator Elizabeth Warren and Fed governors Michael Barr and Adriana Kugler warn it could weaken financial safeguards.