Milbank Financial Institutions Regulatory partner Douglas Landy was recently quoted in the S&P Global Market Intelligence article “BNY Mellon, State Street Would Benefit Most From Change in Leverage Ratios.” The article discusses a proposal by the Federal Reserve and Office of the Comptroller of the Currency to lower the capital requirement for the eight US-based global systemically important banks, or G-SIBs. The proposal to develop firm-specific requirements would bring change to the current enhanced supplementary leverage ratio (eSLR), which is in place to help safeguard against the risk that large US banks face if they become overloaded with debt and lack sufficient capital during a downturn. The eSLR proposal has garnered mixed views among regulators. Mr. Landy, a former New York Fed official, comments “the leverage ratio does not account for the risks attached to different assets, making it a "blunt tool" that treats all assets equally.”
