Impact On The Nation’s Six Biggest Banks Under New Leverage Rule

The FDIC on Tuesday will propose a leverage rule requiring big banks to have common equity equal to at least 5 percent of their assets—stricter than the international banking regulations known as Basel III, noted in CNBC.

We have shown the scenario analysis in the article "Basel III Requirements: A Look at Largest Banks by RBC" dated July 2, 2013 highlighting leverage ratio  (3% to 6%) for the four largest banks, as well as Goldman Sachs Group Inc (NYSE:GS) and Morgan Stanley (NYSE:MS).

Why is This Leverage Cap so Important?

Jaret Seiberg, analyst at Guggenheim Partners in Washington, says the new leverage limit could force banks to hold capital beyond what...