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Fed Working on Proposal to Ease Up on Bank Leverage Limits

  • U.S. regulators ready to relax parts of tough capital demand
  • Obama-era holdout atop FDIC said to drag feet on rule change
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Bloomberg’s Jesse Westbrook reports on a Federal Reserve plan to ease up on bank leverage.(Source: Bloomberg)

The Federal Reserve is working to relax a key part of post-crisis demands for drastically increased capital levels at the biggest banks, according to people familiar with the work, a move that could free up billions of dollars for some Wall Street giants.

Central bank staffers are rewriting the leverage-ratio rule -- a requirement that U.S. banks maintain a minimum level of capital against all their assets -- to better align with a recent agreement among global regulators, said two people who requested anonymity because the process isn’t public. The people said the Fed effort is drawing opposition from the Federal Deposit Insurance Corp., an agency with authority over banking rules that’s still led by a Barack Obama appointee.