WASHINGTON, Feb 24 (Reuters) - A U.S. financial regulator said on Monday that tough new leverage requirements that will limit excessive borrowing by the biggest banks would be finished “soon.”
“I think we’ve gotten the details worked out and now it’s just getting the schedule and... getting everyone lined up,” Federal Deposit Insurance Corp (FDIC) Vice Chairman Thomas Hoenig told reporters at a conference.
Hoenig, speaking at the National Association for Business Economics meeting, said that he expects the final U.S. leverage rules will closely mirror the proposal.
Leverage rules limit banks’ reliance on debt by forcing them to fund a certain percentage of their activities through shareholder equity. The rules aim to make banks safer after the 2007-2009 financial crisis.
Unlike globally agreed capital restrictions, which require banks to judge their capital needs based on the riskiness of their assets, leverage rules are based on firms’ total assets.
The FDIC, the Federal Reserve and the Office of the Comptroller of the Currency last year proposed leverage ratios of 6 percent for big banks, and 5 percent for bank-holding companies.
That would apply to the biggest U.S. banks, including JPMorgan Chase & Co, Citigroup Inc. and Goldman Sachs Group Inc. The U.S. ratios would be higher than a 3 percent ratio agreed upon by an international regulatory group.
Hoenig supports boosting the leverage ratio and relying less on risk-weighted capital rules, which he said are easier for banks to get around. He has proposed a U.S. leverage ratio of 10 percent.