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Democrat takes aim at controversial capital rule disliked by big U.S. banks
December 4, 2017 / 8:35 PM / 13 days ago

Democrat takes aim at controversial capital rule disliked by big U.S. banks

NEW YORK, Dec 4 (Reuters) - A Democratic U.S. senator wants to free the biggest U.S. lenders from having to hold capital against certain assets held at central banks, according to a document viewed by Reuters and a person familiar with it.

Senator Christopher Van Hollen, of Maryland, has submitted an amendment to a financial regulatory reform bill that would give the banks a partial reprieve from a rule known as the supplemental leverage ratio, according to the document.

A spokesperson for Van Hollen did not immediately provide a comment on Monday.

The rule, which Wall Street bankers have complained about for years, requires large financial institutions subject to the U.S. Federal Reserve’s annual stress test to hold additional capital to reflect risks they pose to the broader system.

The amendment is one of more than 100 changes that financial companies, which lobbyists said include JPMorgan Chase & Co, Citigroup Inc and Goldman Sachs Group Inc , are jockeying to make to a regulatory relief bill drafted by the Senate Banking Committee.

The bill, proposed by Republican Senate Banking Committee Chairman Mike Crapo to reduce regulatory burdens on small- and mid-sized financial companies, is due to be formally discussed by lawmakers this week.

It underscores how financial institutions are still trying to secure the regulatory relief they have been hoping for since Republican Donald Trump was elected president one year ago.

Van Hollen’s proposal would eliminate language that imposes the rule on businesses outside of custodial banking, and give regulators 18 months to adjust the rule.

Reuters could not immediately learn whether Van Hollen would be able to garner enough support from other lawmakers on the committee to adopt his amendment. He is one of 11 lawmakers in the Democratic minority who sits on the committee.

Bank regulators developed the supplemental leverage ratio as part of their required rulemaking under a sweeping set of financial reforms known as Dodd-Frank that was passed in 2010. (Reporting by Olivia Oran in New York; Additional Reporting by Michelle Price in Washington; Writing by Lauren Tara LaCapra; Editing by Richard Chang)

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