The Federal Reserve on Friday DECLINED to extend a pandemic-era rule that relaxed the amount of capital banks had to maintain against Treasurys and other holdings, in a move that could upset Wall Street and the bond market.
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Wall Street had been lobbying heavily for an extension of the exemption as banks have been flooded with deposits that require them to hold offsetting capital against customer money.
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In deciding not to extend the SLR break, the Fed risks a further rise in interest rates as banks might decide to sell some of their Treasury holdings so they don’t have to maintain reserve requirements.