Banks contest new leverage limit rule.


According to, many of the United States’ largest banks aren’t happy with a recently proposed rule to increase the minimum capital a bank needs to hold against potential losses.

Banks are saying the new minimum– 5 percent for holding banks and 6 percent for their actual banking components– are arbitrary and harmful, claiming that the rule will worsen an already uneven playing field.

The increase from Basel III’s proposed 3 percent is considered a measure to further protect against vulnerabilities that were brought to light in the 2008 financial crises. Agencies are also considering raising the minimum amount of assets considered to have high liquidity for similar reasons. The nonprofit, Americans for Financial Reform, feels that taking these measures will be a big step towards financial stability.

Several banks have pointed out that these excessive leverage ratios will cause them to have to hold significantly more capital for their less risky assets, like cash, as well. In hopes of alleviating some of the sting, banking groups like the Securities Industry and Financial Markets Association and the American Bankers Association have requested that low risk assets like cash and treasuries be exempt from payment calculations.