NEW YORK (Reuters) - A Democratic U.S. senator is backing away from a proposed legislative tweak that would have helped big banks lessen their capital burden, according to a statement provided to Reuters on Monday.
Senator Christopher Van Hollen, of Maryland, had submitted an amendment to a financial regulatory reform bill that would give banks a partial reprieve from a rule known as the supplemental leverage ratio, according to the document Reuters reported on earlier on Monday.
However, Van Hollen is against the changes and is not offering the amendment to the Senate Banking Committee as written, his spokeswoman Bridgett Frey told Reuters. She attributed the difference to an error in drafting the amendment, whose changes consisted of two paragraphs.
“This is a drafting error,” said Frey. “To be clear, Senator Van Hollen opposes changing capital requirements for non-custodial banks, and he is fighting to ensure that the Federal Reserve writes a strong rule that governs the supplementary leverage ratio rules for custodial banks.”
“To avoid any misinterpretation of his intent, he will not be offering the amendment as written,” she added.
Wall Street bankers have complained about the supplemental leverage ratio for years, and changes to the rule are high on big lenders’ wish list as the financial reform bill works its way through Congress.
The rule requires big banks that are subject to the U.S. Federal Reserve’s annual stress test to hold additional capital to reflect risks they pose to the broader system. Van Hollen’s abandoned amendment would have changed a part of the rule that requires lenders to hold capital against certain assets held at central banks.
The bill being drafted by the Senate Banking Committee was proposed by Republican Senate Banking Committee Chairman Mike Crapo and is due to be formally discussed by lawmakers this week. Van Hollen is one of 11 lawmakers in the Democratic minority who sit on the committee.
The stated intention of the bill is to reduce regulatory burdens on small- and mid-sized financial companies. However, that has not stopped large institutions from lobbying hard to secure regulatory relief they have been hoping for since Republican Donald Trump was elected president last year.
Reporting by Olivia Oran and Lauren LaCapra in New York; Additional Reporting by Michelle Price in Washington; Writing by Lauren Tara LaCapra; Editing by Richard Chang and Cynthia Osterman