# Get Ready for Bank Deregulation Source: https://www.youtube.com/watch?v=SnMMpZ5Pipw Recap page: https://rapidrecap.app/video/SnMMpZ5Pipw Generated: 2026-02-18T14:35:58.185+00:00 --- ## Quick Overview Bank deregulation, specifically the suspension of the Supplementary Leverage Ratio (SLR) during the COVID-19 crisis, allowed banks to take on excessive risk by buying massive amounts of U.S. Treasuries and increasing lending, which the speaker argues is setting the stage for future inflation and a potential liquidity crisis, as the Fed is currently reversing the easing measures. **Key Points:** - The phrase "bank deregulation" refers to the temporary suspension of the Supplementary Leverage Ratio (SLR) in April 2020, which allowed banks to increase risk appetite. - The suspension permitted banks to buy massive amounts of U.S. Treasuries and lend more to the private sector, including high-risk borrowers. - The Federal Reserve temporarily suspended the SLR rule to ease strains in the Treasury market during the COVID-19 crisis, lasting until March 31, 2021, according to the April 1, 2020 press release shown. - The speaker argues that this deregulation effectively allowed banks to gorge themselves on risk, which contributes to inflation by expanding the money supply without corresponding productivity growth. - The core issue of the SLR is that it treats risk-free assets like U.S. Treasuries the same as risky corporate loans, creating a blunt constraint. - The Fed is now reversing this by raising interest rates and draining reserves (Quantitative Tightening), which brings the system back to pre-suspension constraints, creating future systemic risk. - The speaker is hosting a "Traders Wanted" event on February 22nd at 7:00 PM Eastern Time to teach a strategy to profit from these market conditions. ![Screenshot at 00:00: The speaker, identified as Joe Brown of Heresy Financial, addresses the viewer directly against a purple-lit background, introducing the topic of bank deregulation and its connection to the Great Financial Crisis.](https://ss.rapidrecap.app/screens/SnMMpZ5Pipw/00-00-00.jpg) **Context:** The video discusses the economic implications of bank regulatory changes, specifically focusing on the Supplementary Leverage Ratio (SLR) and the Liquidity Coverage Ratio (LCR). The SLR, established in 2014 post-2008 crisis reforms, acts as a capital constraint that does not distinguish between risky and risk-free assets, consuming leverage capacity for both. The discussion centers on the Federal Reserve's temporary suspension of the SLR in April 2020 to support the Treasury market during the pandemic, and the subsequent re-imposition of these rules, which the speaker suggests creates future financial instability and inflation. ## Detailed Analysis The speaker argues that the term "bank deregulation," particularly the temporary suspension of the Supplementary Leverage Ratio (SLR) in April 2020, has set the stage for negative economic consequences. The SLR, introduced as part of post-2008 Basel III reforms, is a blunt capital rule that doesn't differentiate between risky assets and safe assets like U.S. Treasuries; both consume the same leverage capacity. When the Fed suspended this rule during the COVID-19 crisis (as shown in a press release dated April 1, 2020), banks were essentially unleashed to buy massive amounts of Treasuries and lend aggressively to the private sector, including high-risk borrowers. The speaker compares this to receiving a pizza with 8 slices and then demanding 16 slices, resulting in more pizza (money supply/asset purchases) chasing the same amount of goods (productivity/real economy). This expansion of the money supply, fueled by low-interest debt, results in inflation. Now that the Fed has reversed course by raising rates and draining reserves (Quantitative Tightening), these banks are facing constraints again. The speaker asserts that the previous regulatory relief allowed banks to take on risks that they now must unwind or manage, potentially leading to further strain on the system or necessitating future bailouts/monetary easing, which further fuels inflation. The speaker promotes an upcoming event called the "Traders Wanted Event" on February 22nd to teach a strategy to profit from these conditions. ### Bank Regulation Context - The SLR is a post-2008 capital rule treating risky and risk-free assets (like Treasuries) the same - The LCR pushes banks to hold High-Quality Liquid Assets (HQLA) to survive 30 days of stress ### COVID-19 Regulatory Easing (April 2020) - Fed temporarily suspended the SLR rule to ease strains in the Treasury market and increase banks' ability to lend to households and businesses - This suspension allowed banks to gorge on U.S. Treasuries and take on more risk without SLR constraints ### Economic Consequences of SLR Suspension - Banks increased lending to high-risk individuals/businesses and bought massive amounts of Treasuries, fueling money supply growth - This process is linked to inflation, as more money chases the same amount of goods/services (the 'pizza' analogy) ### Current Situation and Reversal - The Fed is now reversing course (raising rates, Quantitative Tightening), draining reserves and tightening conditions - This forces banks to manage the risk taken during the suspension period ### Future Implications - If the Fed continues to ease constraints to avoid a crisis (like buying more Treasuries), it results in inflation; if they tighten, they risk systemic issues - The speaker argues the current environment demands a strategy to profit from market volatility, which he teaches in his event. ![Screenshot at 00:00: The speaker, Joe Brown, introduces the topic of bank deregulation \(SLR suspension\) in his studio setting with purple lighting.](https://ss.rapidrecap.app/screens/SnMMpZ5Pipw/00-00-00.jpg) ![Screenshot at 01:26: Text slide displaying the definition of the Supplementary Leverage Ratio \(SLR\) from an OFR report, noting it was established in 2014.](https://ss.rapidrecap.app/screens/SnMMpZ5Pipw/00-01-26.jpg) ![Screenshot at 02:57: Graphic displaying an invitation to a "Traders Wanted" event on February 22nd at 7:00 PM.](https://ss.rapidrecap.app/screens/SnMMpZ5Pipw/00-02-57.jpg) ![Screenshot at 06:48: Press Release from the Federal Reserve Board dated April 1, 2020, announcing the temporary change to the SLR rule to ease strains in the Treasury market.](https://ss.rapidrecap.app/screens/SnMMpZ5Pipw/00-06-48.jpg) ![Screenshot at 07:35: A press release titled "Temporary Supplementary Leverage Ratio Changes to Expire as Scheduled" dated March 19, 2021, showing the temporary nature of the suspension.](https://ss.rapidrecap.app/screens/SnMMpZ5Pipw/00-07-35.jpg)