by More on the proposed changes to bank regulatory capital requirements here from the Peterson people.Article is anti-proposal but there is still some good confirming data there regardless. How much would the Treasury's proposed exemptions from the exposure base reduce the effective capital requirement for the US G-SIB banks? One indicator is that the Treasury considers that "Large U.S. banks hold nearly 24% of their assets in high-quality liquid assets such as cash, U.S. Treasury securities, and agency securities".[10] More specifically, at the end of 2016 commercial banks had total assets of .07 trillion, of which Treasury and agency obligations amounted to .43 trillion and cash (including reserves at the Federal Reserve) stood at .21 trillion. So there are about .5T of risk
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More on the proposed changes to bank regulatory capital requirements here from the Peterson people.
Article is anti-proposal but there is still some good confirming data there regardless.
How much would the Treasury's proposed exemptions from the exposure base reduce the effective capital requirement for the US G-SIB banks?
One indicator is that the Treasury considers that "Large U.S. banks hold nearly 24% of their assets in high-quality liquid assets such as cash, U.S. Treasury securities, and agency securities".[10]
More specifically, at the end of 2016 commercial banks had total assets of $16.07 trillion, of which Treasury and agency obligations amounted to $2.43 trillion and cash (including reserves at the Federal Reserve) stood at $2.21 trillion.
So there are about $4.5T of risk free assets there tying up about 10% of that (assume LR run at about 0.1) as regulatory capital; or i.e. perhaps as much as $450B which would become available to the system if this regulatory reform is promulgated by the Executive Branch.
Also of course no time domain analysis here in the article of how these bank assets got there in the first place and what those actions caused.
The Economic Cost of Weakening Capital Requirements for Large Banks - PIIE https://t.co/9xoBBCuZzk— Mark Thoma (@MarkThoma) September 29, 2017