Banks fear time-limit on Fed leverage ratio reprieve

Capital constraints not covered by relief also weigh on balance sheet strategy

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The Federal Reserve estimates the temporary removal of US Treasuries and central bank reserves from the calculation of the supplementary leverage ratio will free up a staggering $1.6 trillion in extra bank leverage exposure.

But banks say they are reluctant to commit that extra balance sheet, due to a one-year time limit on the exemption and other capital constraints that remain in place because of gaps in the relief provided.

“Most firms are still dealing with a number of issues in terms of

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