The $121 billion the Fed said could be redeployed by its leverage-ratio proposal comes with a catch.
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On April 10, the Federal Reserve proposed making the stress tests less stressful, while tying capital demands much more closely to how banks perform in the annual exams. On April 11, the Fed and Office of the Comptroller of the Currency proposed easing limits on how much banks can rely on borrowed money by tweaking the leverage ratio rule, which is meant to prevent lenders from getting dangerously overextended.The Fed's new approach to more closely align capital with the stress tests should be good news for regional banks like SunTrust Banks Inc. and PNC Financial Services Group Inc.Fed and OCC proposal to limit bank leverage is broadly good for the eight banking giants it affects, including JPMorgan, Goldman Sachs Group Inc. and Citigroup Inc.However, the regulator said capital demands for the biggest banks might actually rise by as much as $50 billion.In the Fed's proposal on stress tests, it aimed to make sure that Wall Street capital requirements are unchanged or even higher.
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