Federal regulators are considering whether to relax liquidity rules on the nation's banks to help reduce pressure on them coming from the coronavirus pandemic, sources said on Tuesday.Â
The Office of the Comptroller of the Currency, which regulates banks and federal savings associations, is considering relaxing its 2013 rules over leveraged lending, the sources said. The OCC has not made a final decision and there is substantial resistance to the idea, the sources said.Â
The move would remove some restrictions on banks to provide loans to companies that are seen as risky, possibly freeing up money for firms in the energy sector that have been hit by the unfolding public health crisis and the global pullback in economic activity.Â
Those who are opposed to relaxing the 2013 rules note that they have been effective at keeping banks from extending risky loans that could have put them in a precarious position during the present turmoil.Â
The nation's major financial regulators have raced to take emergency action to address the coronavirus crisis that has tanked global markets and threatened to send the U.S. economy into recession.
Over the weekend, the Federal Reserve said it will slash its benchmark interest rate to near zero and announced $700 billion in stimulus measures. On Tuesday, the central bank said it would create a new credit facility to provide assistance to companies struggling to get short-term funding.Â
The Fed move on Tuesday gave a boost to financial markets that have been routed in recent weeks over COVID-19, the disease caused by coronavirus, that has infected more than 180,000 people around the world and killed more than 7,000.Â
On Monday, the Dow Jones Industrial Average and S&P 500 suffered their biggest one-day losses since 1987, falling 12.9% and 12%, respectively.Â
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