Federal Reserve Poised to Hand Wall Street a Big Gift

Wall Street is poised to receive a big gift courtesy of the Federal Reserve. The central bank unveiled plans to roll back an important capital rule that big banks have complained limits their ability to hold more Treasuries and act as intermediaries in the $29 trillion market. (The Fed’s announcement confirmed proposed changes to the rule first reported by Bloomberg News last week.)

The Fed board voted 5-2 on Wednesday to propose changes to what’s known as the enhanced supplementary leverage ratio, which applies to the largest US banks—like Bank of America, JPMorgan and Goldman Sachs. The revisions would reduce holding companies’ capital requirement under the ratio to a range of 3.5% to 4.5% from the current 5%. Their banking subsidiaries would see that requirement lowered to the same range from 6%.