White House Urges Fed to Ease SLR Rules for Banks Amid Treasury Market Concerns

The White House is pushing for the Federal Reserve to adjust regulations to allow major banks to increase their holdings of Treasury bonds, aiming to stabilize the market for U.S. debt. However, the Federal Reserve is not rushing to implement these changes, according to reports from Semafor. The Federal Reserve has been working on a proposal related to the Supplementary Leverage Ratio (SLR) since February, but there is no urgency to finalize it. This reluctance comes despite support from Treasury Secretary Scott Bessent and JPMorgan CEO Jamie Dimon for easing the rules that currently penalize banks for holding large amounts of Treasury bonds. U.S. Deputy Treasury Secretary Faulkender has confirmed that discussions are ongoing regarding the SLR, with a focus on understanding how it impacts the bond market during times of stress. These discussions are part of a broader investigation into the effects of the SLR on U.S. bond market liquidity. Swap spreads have shown slight increases in response to these discussions, reflecting market volatility and investor concerns.