Welcome to No More Risk Better, a Credit Sites podcast. Across the global strategy team, we aim to make sense of the macro and the micro, highlighting opportunities and the risks facing the fixed income markets. As the macro makes headlines, we leverage our network of experts across fit solutions to better understand economic trends, rates, gyrations, geopolitical events, and how these factors impact corporates. At Credit Sites, we understand that credit investing comes down to picking winners to generate alpha and avoiding losers.
Our team of over 100 analysts across the U.S., Europe, and Asia provide unmatched sector expertise and fundamental knowledge. In our weekly podcast, the strategy team offers a look at the conversations we have with our colleagues, including analysts, fellow strategists, economists, and leverage finance market experts. If you want to know more so that you can risk better, you'll want to give this podcast a listen. Hello, everyone, and thank you for tuning in to another episode of No More Risk Better, a Credit Sites podcast.
I'm your host, Zach Griffiths. For the first time on video, as many of you may know, and some may not, I'm the head of U.S. investment grade and macro strategy at Credit Sites, and I'm delighted to say I will be joined by one of my current esteemed colleagues, Peter Simon, our co-head of U.S. financials, and one of my esteemed former colleagues, Rick Gams, who is now the head of U.S.
for the market today. I'm going to try and pluck out some key takeaways for financial markets more broadly. Rick and Peter, thank you both so much for coming on the podcast. Thanks, Zach.
Good to be here. All right, so before we get started, Rick, can you just give us a couple minutes about your background and sort of outline your main responsibilities in your current role at Citi? Sure, yeah. So I joined Citi's regulatory strategy and policy team December 24th, not that long ago, as the head of U.S.
financial rate policy. I'm based in D.C. for that role. That means I lead up a small team of subject matter experts, mostly attorneys, who formulate views and advocate the bank's positions regarding current and forthcoming financial regulatory policies, like positive endgame, like the soft money leverage ratio reform.
There's some liquidity-related regulation, like enhancements of the discount window and broker deposits, some possible changes to the liquidity coverage ratio, etc. There's a lot going on. I won't go down the whole litany right now and think we'll get into the specifics, but it's basically all the issues that are the purview of the federal banking agencies, the Fed, the FDIC, and the OCC. That's when I say prudential regulatory policy.
That's what we need. And we engage with the regulators, with trade associations, related stakeholders internally and external on all of that, like these banks' views, industry views on these various regulations. And before Citi, I had a similar role at another G-Sib. And for that, Zach and I worked together at another G-Sib.
I was an attorney by training and a banker in a former life and wholesale credit, among other things. And I've been doing this regulatory policy gig for at least the last 10 years. Yeah, I can't believe it's been about 10 years since we worked together at B of A. And I think if anyone questions Rip's commitment to understanding the regulatory backdrop, I believe he had a picture of Daniel Tarullo up in his cube at Bank of America.
I don't know that he put it up there himself, but I know it was there for the entire time we were there together. Rick, can you confirm that? I do not have pictures of any other Fed governors in my office here, but you are correct to remember that. All right, so it's a great time to have you on the show, Rick.
I know the Fed just hosted an integrated review of the capital framework for large banks. That conference was on July 22nd. I understand you were there in person for the conference. And one of the recurring themes that I found going through some of the panels throughout was a desire for the current regulators to avoid increasing capital in the system.
So I think just to start out, my real question is, are any of the proposals being considered right now likely to materially decrease capital requirements in the system after this kind of huge increase we saw in response to the financial crisis? Sure, yeah. Let me start out back with the July 2023 Basel III endgame proposal, which would have materially increased capital requirements, predominantly for the large banks, the GSIBs. That is, as you and I'm sure most of your listeners and viewers know, that proposal is going to be reproposed and definitely pared back.
But to be more direct in answering your questions, nothing I think in play right now will materially decrease capital requirements. We do have a proposal in flight for the enhanced supplementary leverage ratio, which perhaps we'll get into a little later, which would recalibrate that requirement. That's a risk-insensitive backstop leverage ratio requirement for the largest banks. But I wouldn't say it's a material decrease.
There's a full quantitative analysis in the NPR, and it's only a single-digit decrease in leverage requirements. The Basel III endgame re-proposal from that July 2023 proposal is expected in the coming months, as early as the end of this year, probably Q1, 2026, that's my guess. We understand that the agencies are hard at working on that re-proposal. We think that will, I think, I should say, that that will obviously be a step down from the July 2023 proposal, but I don't see it as a material decrease in capital requirements.
There's an expectation that there will be... So former Fed Vice Chair Michael Barr gave a speech in, I think it was September 2024, where he outlined, this is obviously before the election, before everything changed, he outlined a number of sort of step-downs or step-backs from that July 2023 proposal that would reduce U.S. gold plating, as we call it, like super equivalently to the Basel standards. So the Basel Committee on...
I'm going to go down a rabbit hole, I'll try to be brief. The Basel Committee on Banking Supervision is this international standard-setting body that is comprised of, you know, the big economies of the world and central bankers that get together in Basel Switzerland and over a period of years, create these model rules, which the U.S., the EU, the U.K., et cetera, take back and then implement, hopefully, faithfully in their local jurisdictions. That process was finished in 2017, and we're still trying to finalize it here, really globally, but certainly in the U.S. It was never meant to be a material increase in capital requirements, but the U.S.
tends to take the Basel standards and add to that, which is what we would call gold plating. So that's a long wind-up to say that we expect some of the gold plating from the 2023 proposal to be reduced. There's some duplicative elements that I don't think we need to go into, but that we expect to be either removed or reduced. So while it was something like a 19% increase in capital requirements for the largest banks under the July 2023 proposal, the expectation or hope of the reproposal, fourth-time reproposal, is that it would be maybe a single-digit increase in capital requirements, but certainly less than what we saw two years ago.
Great, Rick. That's a good lead-in to sort of a bigger picture question that I had, which is, so in my seat, I've been getting a lot of questions all summer from clients on what do we think of the deregulation that's happening or there's a narrative that there's this big deregulatory push happening, which I don't necessarily agree with. I think that that's maybe not, it's a mischaracterization or maybe not the most nuanced way to think about what's happening, but I just wanted to kind of get your view on, you know, is, if you take a look at all of the things that are being discussed, does it amount to deregulation or is it more kind of a recalibration of existing standards, which are still quite stringent? Yeah, so I would say it's the latter.
I really, I reject that too. I wouldn't say it's a deregulatory push in DC. I don't think you can, but not so much for bank regulations. I mean, there's clearly a lot, there's a new world order in DC and there's a change in posture for a lot of things, but from the bank regulatory perspective, it's recalibrating, making sure things are fit for purpose.
The industry doesn't want the boss of the endgame to go away. They just want it to be calibrated properly to not have these duplicative elements to make sure that there is a cost to increasing capital. Like we've seen the movie before in the sense that, you know, without adequate capital, without adequate regulatory and supervisory regimes, bad things can happen. So the industry is in favor of finalizing boss of the endgame sensibly and reasonably.
You know, that means taking away some of the gold plating. That means more international harmonization, allowing US banks to compete on an even playing field with their national peers, et cetera. So I think they understand where there are certain factions who are saying this is all deregulation because anything that reduces or recalibrates may change, but I don't think that's an accurate depiction or characterization of how the regulators, how the vice chair for Supervision Bowman, the new Fed vice chair, who's really behind a lot of this push for reform. I don't think that's how she's looking at.
Great. And just a follow-up on, we kind of mentioned ESLR, so kind of wanted to get your thoughts on some of the impacts there. Just in terms of capital levels, you mentioned that the estimates from the Fed for the impact on hold co-level capital requirements was fairly minimal. Would you say that, you know, a broader kind of balance sheet perspective that the impacts across the sector are going to be more significant on the funding and kind of long-term debt requirement side than relative to capital?
Yeah, it could be. Let me take a step back. The leverage ratio, there's multiple leverage ratios. We have the tier one leverage ratio that's been around sort of forever.
There's community bank leverage ratio. There's the supplementary leverage ratio. Then there's the enhanced supplementary leverage ratio. These are all meant to be complementary backstops to the risk-based requirements.
They're necessarily risk insensitive. And when they are, they come close to being binding constraints for banks, I think they can incentivize the wrong behavior, wrong activities coming out of banks. So it makes sense to look at these and make sure that particularly holistically, we hear that term from Beister, Bowman, among others, looking at all the requirements holistically. If the risk-based requirements aren't increasing double digits, then that necessarily means that these risk insensitive leverage ratios are closer to being binding.
So the recalibration of these, I think, just generally makes sense. And particularly when they're using a dynamic score, so that if the risk of going away into too much detail, there's a 3% and 2% buffer for the ESLR on top of the 3% SLR. I know I'm going into too much detail here, but the calibration now is not just going to be a static buffer. It's going to be 50%, or at least the proposal is 50% of a GSIB method one GSIB surcharge on top of that 3% like foundational supplementary leverage ratio.
So it'll be a little bit different per bank. You know, there'll be a, I don't want to say it's risk sensitive, but like the GSIB surcharge factors in a number of risk factors, interconnectedness and size, et cetera. So using the GSIB surcharge, like different banks will have different ESLR minimums. So I just think that's sort of the next thing I'm trying to wind up to say is that the leverage requirements should support the more risk sensitive or risk-based requirements.
And that the other thing that they're trying to do here is to encourage or incentivize treasury market intermediation. And if you have a risk incentive ratio that anything on your balance sheet on the asset side increases your leverage, like deposits or holding quote unquote riskless treasury securities, if you have a disincentive because of a requirement to do that, then yeah, I think that impacts funding markets, that impacts broader policy decisions and policy choices that the treasury and the administration are making. And we're looking at a treasury market that's going from, I think, what, 30 to 50 trillion in the next 10 years. So there's going to be a lot more paper in the market and a lot more banks will need to intermediate that.
There'll be a primary player in treasury market intermediations. Freeing up capacity or least availability to do that, I think it's sensible. Yeah, Rick, I wanted to go there next in terms of the impact on the treasury market. And just to firm up on some of the comments you made there, in terms of what is being proposed now, how much will that reduce the ESLR relative to either what's in place now or what had been proposed in July 2023 just to sort of level set on this specific ESLR topic?
How much will it reduce like as of current versus proposed? Well, I think the idea is to try to reduce the impact of the SLR on these leverage ratios in order to allow banks to intermediate in the treasury market. As you noted, during COVID, they excluded reserves and treasuries from the calculation and I think there was some optimism that we could move that to a more permanent situation. That's not the current proposal as I understand it, correct?
Right. So yeah, just to level set, the proposal is to change the calibration, the requirement. It's not to change the denominator, which is total leverage exposure, which is like basically everything on balance sheet and some off balance sheet assets. Right.
So I think there's two levers there how to recalibrate. You could change the denominator and pick cash, pick treasuries, pick something else, certain repos. I mean, there's a number of assets I would say that are either riskless or less risky or shouldn't really increase a bank's leverage because of the other types of assets. So the question is, you know, where do you stop?
And I think it's cleaner to recalibrate and by that, I mean, change the actual, you know, and the requirement to lower the bar, if you will. During COVID, you're right, they allow banks to exclude cash and treasuries from the denominator. You're also like picking favorites, if you will. So if you exclude treasuries from the denominator or exclude cash, what I'm saying is banks have a choice.
If you want more reserves, maybe you exclude reserves from the denominator. If you want banks to play a bigger role in the treasury market, maybe you exclude treasuries from the denominator. And I don't know if the agencies, the regulators should be in the business of like picking favorites. So changing the end requirement seems like one, it's cleaner in my opinion and two, it doesn't differentiate, if you will.
Like they should be risked, but it should, like the risk insensitivity of leverage ratios by their nature calls into the question when you start to exclude certain assets, in my opinion. Yeah, that certainly makes sense to me. I think the big question and bringing in some of the more macro markets focus, one of the ideas was coming in this adjustment to the SLR, whether it be excluding treasuries or adjusting requirement as you outline would increase banks' appetite to own treasuries maybe on an asset swap basis or outright with that would tighten swap spreads or excuse me, widen swap spreads so become less negative in terms of treasuries richening versus swaps. And we really haven't seen that this year.
And we had a conversation with one of my other former colleagues on the rate side who basically said the bank investment portfolio managers that he's spoken to suggested that even with this proposal it's unlikely to increase banks' investment portfolio demand for treasuries. How do you think about the potential market impact or the proposal as it stands today and the potential to impact banks either desire to hold treasuries in terms of their own investment portfolio or be able to warehouse more treasuries in the broker-dealer on the trading desk? So I think I used the term capacity and maybe I used flexibility before. I think it directionally just mathematically would provide more capacity to do that.
I don't know if it's going to provide more appetite. Like I don't know I just don't I'm not in the CIO seat I don't sit on a treasury desk and I don't have a sense that this is going to be I've read the press probably maybe not as much as you guys do you're probably closer than I am in terms of the actual market impact of this but I do question will this really unleash banks' appetite to hold meaningfully more treasuries? I think it will again provide the capacity to do that but I really don't know if it's going to be some game-changing difference in banks' banks' appetite to do that. So the other question I think that came up during the I think it was the first panel one commenter argued that the real policy question with respect to the ESLR is the proper size of banks' prime brokerage activities now that hedge funds are the primary providers of capital in the treasury market do you agree with his assertion there?
How do you think about how the prime brokerage activities and facilitating risk-taking by the hedge funds fits into this entire consideration? Yeah, I remember that it was a crowded room we were shoulder to shoulder and it was at the end of the day I think I remember that comment and I think it was more about it's yeah like hedge funds play a major part in this you know the primary provider capital treasury market etc and I think banks' ability to finance or fund hedge fund market activity is sort of in play here as a secondary question so I think that's it was a fair point a fair maybe rhetorical question raised by that CEO I see where he's coming from yeah I mean look I'm just thinking a little bit more about it I'm trying to remember that yeah if hedge funds are the primary players and banks are behind them like if banks should be you know we provide whatever financing for a lot of different things including financial market intermediation by hedge funds and other market players and that's an appropriate you know generally an appropriate place for banks to be and to operate in so I see where this proposal has an impact on that I guess I believe it at that Great yeah that also kind of leads into another kind of bigger picture question I have for you Rick which is you know I think we've gone through kind of what some of the potential outcomes are for capital ratios and you know it sounds like you're not expecting you know major step change down in capital ratios but you know I've been asked the question what do these changes do do long term to the risk profile of the sector. My opinion has been that the tweaks to capital ratios are not really going to be all that impactful. But what could be more impactful is what changes to the business activities of the sector do we see as a result.
So that might take years to play out. But just wondering if you have any thoughts on that. Should we as observers of the industry expect kind of on the other side of these changes, you know, can change in the set of activities that the sector is participating in, you know, and or, you know, any kind of build up in risk on the balance sheets? Let me take a step back.
I've been thinking about this holistically. I've said that like four times now. Like we were talking about leverage ratios for a bit here. There's so many other like pillars and facets and elements of the regulatory regime.
When you think about the post-crisis regime, we've got risk-based requirements. We've got these leverage ratios, some of which, like I said, have been here forever. We have this comprehensive liquidity framework with leverage coverage ratio and stable funding ratio. We have liquidity stress testing.
We have capital stress testing, a very dynamic stress testing regime, which, by the way, is also under consideration for reform, I think necessary reform. But still, it's a major part of banks' capital planning and capital management and also, you know, supervisory scrutiny by the regulators. Then there's regulator to planning. What else?
I can keep going on. But there's so much, there's so many sort of like the Swiss cheese effect of regulation supervision that we certainly post, you know, 2009, 2010, post-off-ranked, the banks are subject to so much more robust regulation supervision that I just don't think that like a change to the ESLR is going to impact bank activity in a negative way. I think, yeah, I just don't, I feel like I'm thinking about all the non-bank financial institutions, crypto, stable coins. There's so much that's sort of circulating around the banking industry right now that we are, there's a lot of uncertainty, in my opinion, and variables out there with regard to the non-banks, with regard to, yeah, finalizing Basel.
Clearly, the crypto industry has a big voice in Washington and a growing voice kind of on Wall Street. So how does that impact bank activity? Some banks are embracing it. Some are fighting against it.
We're all, I think, trying to figure that out right now, how to embrace digital assets. I can kind of go on and ramble, but like, well, actually, there's a lot of, there's just so much at play right now that I don't think, I think there's, there's not like one lever, one thing that's going to change bank activity. I feel like that's one of the things that came up when Peter and I were discussing this podcast before is, you know, there's a lot of deregulatory focus coming out of this administration, but in terms of actual deregulation for the banks, that's really not what's been on the table. And if you zoom out and take the past 15 years in aggregate to consider these minor tweaks to everything that's been done since the financial crisis as deregulation is almost absurd when thinking about the net change from, let's say, pre-crisis.
And I feel like another one of the topics that came up at least a couple times in the recent conference is addressing how perhaps some of the regulatory measures taken have had unintended consequences like pushing risk-taking out of the banking sector. A thing that comes to mind immediately, of course, is private credit. And if we really, as a broader financial system, want more of the risk out of the purview of regulars. And so when you see some of the proposals out there today, it sounds like you don't think anything is going to change the business activities, as Peter asked, of these banks.
Is there really much focus on trying to bring some of that, what I would consider at least private credit direct lending to just be old school commercial banking? Is there a lot of focus on trying to bring that lending back to the banks? I don't know if it's explicit, but I think that I think it's a fair point. I think it's a reasonable one that directionally it's better if financial activity, particularly risky financial activity, is within the regulatory perimeter.
And if you have extraneous regulation supervision that incentivizes that activity to migrate away from it, then you don't have any view of oversight and who knows what is bubbling up or brewing up in a dark corner of a non-regulated market that's going to impact the state of the least of the broader macro economy. It's not to say that regulation supervision is a panacea. It's going to solve everything, but at least it sheds light on, and banks are well-controlled, and most of them are. Banks have robust risk management, et cetera.
Another thing we've been encouraging here, and banks are encouraging the agencies to do, is really focus on balancing the safety and soundness with economic growth, but also focusing on material risk. There's a lot of supervision. Supervision is necessarily sort of bilateral between the supervisors and the banks, so it's not as easy to evaluate on a holistic scale because a lot of confidential supervisor information, et cetera. But there is definitely, Vice Chair Bowman said it many times, that she has concerns about supervisors focused on compliance exercises, like focusing on process and procedure versus material financial risk.
So we, you know, I guess we're encouraged, I would say, by the thrust to focus supervisors' attention on things that, you know, could really impact a bank's liability. That's where we think the supervisors should be spending most of their time, at least that's from my opinion. I'm a little further removed from the supervisory space, so I don't want to speak too authoritatively, but I think from general platitudes, that's a fair statement. Yeah, I feel like what has to be encouraging for the banks, and I'd say for investors, is giving some of these measures a harder look to understand what is currently well-calibrated and not having unintended effects or are perhaps unnecessarily expensive for the banks and trying to, like you mentioned, balance that safety and soundness with economic growth.
I feel like that really hasn't been a focus. It's all been on safety and soundness and making sure undue risk take isn't happening. And so from your perspective, listening to all the remarks at this conference and all of this focus on having a little bit better balance and having a holistic view, not just tweaking one leverage ratio and not considering it in the entire scope of regulation, how do you feel, is that being addressed now? You can say that's what we need to do.
Is it being done? I think there's at least our efforts to do that. To your point, they're talking about, they're acknowledging that that's an issue. This holistic review of the capital framework, of the regulatory framework, not just capital.
Not just tweaking an individual component and, you know, somewhat of a lack of a game. You have to look at the system-wide impacts and how things, how requirements interact with each other, how it's calibrated, etc. That is encouraging to see. I think I said Swiss cheese earlier, what I meant was that there's, you know, 10 different, I'm making a number of, but there's like 10 different, you know, requirements that we're subject to, it's more than that.
But how those interact with each other is not always in concert. I don't think it's, you know, never, but it's not, you know, it's not a pure correlation. So we do encourage, we are pleased to see the regulators acknowledging that there's, they should, like not all of this can be finalized in the same, like bottles of the end game, not everything's going to be done at the same time, but that doesn't mean that it can't be, they can't have a holistic sort of system-wide view of how regulation supervision impacts the industry and each bank. Great, yeah, so I just had a follow-up on something we were discussing or briefly mentioned earlier, which was the stable coin regulation.
You know, I think we have a few minutes here, so I'll force the crypto issue into this discussion. But it seemed like, I mean, just listening to second quarter earnings calls across the sector, there was a lot of discussion, a lot of questions and a lot of discussion about stable coin and where that's going. There seems to be, there seems to be an impetus across the sector to do, to be involved somehow. So here's my question is just generally, how significant do you see the regulatory changes on stable coins and sort of the mainstreaming of crypto activity potentially, and how involved do you think the large banks are going to be in that space going forward, or is it too early to say?
Well, I think it is early, but you know, you're hearing, like you said, earnings calls, banks leaning into it, acknowledging maybe they'll share their own stable coins, they'll custody digital assets, they'll be a value-added provider to like the digital asset ecosystem. I just made that term up, but you know what I mean, like they're going to be involved. I don't think, I don't think banks are just completely shunning the entire sort of new world order of crypto, stable, digital. That would probably be not a good strategic move, but you know, the extent to which banks lean into it or not remains to be seen, and it sort of seems like it's changing week to week.
On the rulemaking front of this, you know, the recent legislation, there's going to be a lot, I'm trying to say a nice word, a ton of rules that need to be promulgated, written by the OCC related to stable coins. So there's, there's a lot of work to be done now that the OCC is like the primary regulator of stable coins by legislation. And that, I mean, I don't, I'm off my fairway here on the digital side, but I do, I do question like the bandwidth and the expertise, et cetera, of the agencies to be writing really effective rulemaking to faithfully implement the recently passed legislation. And it's like within 12 months, I could have a really short turnaround on that.
If I write 12 or 18 months in the law, I don't recall, on top of voluntary end game, and on top of this ESLR, they're doing stress testing work, there's possible changes to resolution, there's changes that come across the board. And, you know, if you, if you've been following the news, no sarcasm, there's, there's not a lot of increase in government employees right now. So like there's, you know, I would imagine there's staffing issues, et cetera, at the agency. So there's a lot of work to be done by the banking agencies on a lot of fronts in like the next 12 months.
So I'm, you know, there's, I don't want to say it just remains to be seen. We do have this, we're in real time. We're seeing very dynamic changes. I also appreciate the judicious way you mentioned crypto having more of a voice in Washington these days.
I think that's probably a little bit of an understatement, but before we let you go, is there anything that really stuck out to you attending that conference in terms of regulatory regime review for the large banks that we haven't covered that you think is going to be particularly impactful for the banks themselves, or perhaps has larger knockout effects for financial markets more broadly? Yeah, maybe this is probably a wrap up. I think we've touched on most of the themes from the conference that I can think of. We talked about looking at things holistically, but we heard that loud and clear that the regulators should and are taking a holistic view to the capital framework, the regulatory framework in general, the balancing safety and soundness with economic growth and also material financial risks.
I interjected the word financial, but material risks, not just financial, because, you know, there's operational, there's other things, but focusing on, focusing supervision, like they remove reputation risk from the supervisory handbooks. They've been removing some, they just, there's a proposal out to change the large financial institution rating system to reduce the impact, well, I shouldn't say it that way, but to, I will, to reduce the impact of just one element. So I'm going on a rabbit hole. The LFI, large financial institution rating system, there's three components, there's capital, liquidity, and governance controls.
If you have a deficient one in any of those, you're not well managed. So you can have all the capital and all the liquidity in the world, but if you're considered deficient one on governance controls, you're not well managed, and there's not going impacts of what you're allowed or not allowed to do. And this proposal reduces the impact of just one element, like governance controls, because it's sort of qualitative. I'm not saying governance controls is important, but it shouldn't, the analogy used by one of our trade associations is, it would be like, if your GPA was just your lowest grade.
If you have three A's and one C, then your grade is a C. Like, that's not how generally things work. So looking at things holistically, looking at things in the aggregate, that's a little sidebar, but that's part of this push to be a little more, I would say, holistic in the way regulators look at the system. I lost my train of thought, but that was like, that was one of the themes, I suppose, as a micro example.
Then there is some other micro, like changing the GCIP surcharge needs to be recalibrated to take account of economic growth since 2015. It hasn't, it's been static. Without going into more detail, that's something that seems pretty sensible. I talked about stress testing earlier, there's a movement afoot, there's average stress testing and stress capital buffer results over a two-year period.
There's also talk about more model transparency and more transparency around scenario design. And we think that's sensible, but also you need to preserve like the dynamic effect of that exercise. You can't just make it a compliance exercise. So, you know, threading the needle on that is something that I think we heard that in one of the panels and it's important.
I think that's really it. Yeah. Those are the, those are the thematically and at a micro level where I'm thinking and where I think we're headed really more important. Yeah.
I think pulling it all together when I think about the markets broadly and maybe what some of this means, it doesn't sound like any of these changes are going to materially increase banks' risk-taking ability and increase fundamental risk of banks while at the same time, perhaps at the margin, recalibrating some of these measures, maybe frees up some capital, maybe helps ability to intermediate in the treasury markets in the future. So it seems like all a positive generally for the banks themselves from what they're able to do, maybe not a huge market mover in the near term and certainly not completely settled, but the regulators are having conversations that are probably more productive and more encouraging for the banks balancing, again, the safety and soundness versus economic growth, where it had been so solely focused on that safety and soundness component and that has to be considered a move in the right direction. I think that's fair. Yeah.
All right. Interesting times to be in my wonky world of regulatory policy. You mentioned 10 years ago, like when I got into this, I didn't know and I didn't think this was going to be that interesting. I'm a lawyer by training, so reading the Federal Register and long tomes like without falling asleep or bashing my head to the desk is sort of predisposed to that.
But it really is an interesting time to be in and around this space because so much is happening. And to have a little bit of perspective of, you know, years of doing this to compare and contrast and be part of it is, yeah, it's rewarding. And I enjoy talking about it. So thanks for the opportunity.
Yeah, we really appreciate you coming on the podcast, Peter. Thanks for joining me and co-hosting. And I'd like to thank you all for tuning in to our second video podcast of No More Risk Better. We hope you'll join us again soon.
Good luck out there. Thanks for joining us.