The new FDIC leverage rule for banks is reportedly going to be 5%, reports CNBC, well-above...

The new FDIC leverage rule for banks is reportedly going to be 5%, reports CNBC, well-above Basel's 3% requirement, but below the 6% floated over the past few weeks. Once the rule is proposed, it is then put out for comment and regulators might later adjust as necessary. The new requirement is expected to be a nonevent for the banks - many of which are already at that level and others which shouldn't have a problem tweaking things to get there.

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  • BBob
    , contributor
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    What does this mean? Everyone is reporting this; no one is taking 1 sentence to explain the impact. If I have an account and I can go from 3% to 5% leverage that means I can have more borrowed money. Please explain. Thanks!
    Update found on RANsquawk: "requires banks to hold loss-absorbing capital equal to 3% of total assets, known as a leverage ratio."
    They would have to hold more loss absorbing capital. Many say that the big banks are already there. Per Motley Fool:
    "Big banks already meet Basel III capital requirements.
    Most big banks in the U.S. already meet the stricter new capital requirements. At the end of the first quarter of 2013, Bank of America’s Tier 1 common capital ratio on a Basel III fully phased-in basis was estimated at 9.42%. Citigroup’s estimated Basel III Tier common capital ratio at the end of the first quarter of 2013 was 9.30%. JP Morgan’s was 8.9%."
    9 Jul 2013, 09:37 AM Reply Like
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