U.S. Congressman Andy Barr, along with a bipartisan group of senior lawmakers from the House Financial Services Committee, has called for reforms to leverage rules at the Federal Reserve and the Office of Comptroller of the Currency (OCC). The group includes U.S. Congresswoman Ann Wagner, U.S. Congressmen Brad Sherman, and Bill Foster. They have addressed a letter to Federal Reserve Chairman Jerome Powell and Acting OCC Rodney Hood.
The lawmakers stated in their letter: “Leverage requirements have not been updated since their inception and have, at times, become a binding constraint for large intermediaries of the U.S. Treasury market.” They seek to understand how and when adjustments will be made to improve Treasury market functionality.
They emphasized the significance of the U.S. Treasury securities market: “The market for U.S. Treasury securities is the world’s most important financial market,” noting its impact on borrowing costs for the government.
The letter requests answers regarding options being considered by the Federal Reserve to address various leverage ratios such as Supplementary Leverage Ratio (SLR), Enhanced Supplementary Leverage Ratio (eSLR), and Tier One Leverage Ratio (T1L). It also inquires about potential impacts on Treasury market liquidity and stability, as well as timelines for proposing changes.
Lawmakers expect a response from regulators by Thursday, June 26th.
