Back to the future: the nature of regulatory capital requirements

摘要: This paper compares the current regulatory capital requirements under Dodd–Frank Act and 10-% leverage ratio, as proposed by US Treasury House of Representatives’ Financial CHOICE (FCA). We find that majority banks would not qualify for an “off-ramp” option—where relief is offered to qualifying banks organizations (QBOs)—unless considerable amounts are added large much closer threshold and, therefore, more likely stand gain from relief. The identifies important moral hazard problem arises due QBO optionality, where increase riskiness their asset portfolio FCA with unintended effects on financial stability.