ALL INPredictions
Last updated Nov 29, 2025
Prediction
Chamath
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Chamath @ 01:31:03Wrong
politicsgovernmenteconomy
In 2025, the US will refrain from major rule changes such as easing supplemental leverage ratio treatment of Treasuries to prop up banks; if those goal‑post‑moving regulatory tweaks do not occur, it will indicate that elected officials rather than the "deep state" are driving policy.
Small, arcane regulatory changes that allow us to kick the can down the road stop in its tracks. This is an example.
Explanation

Publicly available regulatory actions in 2025 show that U.S. bank regulators did implement exactly the kind of technical, leverage‑related relief Chamath was saying would “stop in its tracks,” particularly around rules that constrain banks’ balance‑sheet capacity for low‑risk assets like Treasuries.

Key facts:

  • On June 27, 2025, the Federal Reserve, FDIC, and OCC jointly proposed modifying the enhanced supplementary leverage ratio (eSLR) for the largest banks, explicitly to ensure it functions only as a backstop and does not discourage low‑risk activities such as U.S. Treasury market intermediation. The agencies acknowledged the proposal would reduce Tier 1 capital requirements for affected bank holding companies (by <2%) and more for some subsidiaries. (fdic.gov)
  • On November 25, 2025, those agencies finalized this rule, lowering the effective eSLR buffer from a flat 2% add‑on to a smaller, GSIB‑surcharge‑based buffer capped at 1% for key subsidiaries, and again stressing that the change is meant to give large banks more capacity for low‑risk activities like U.S. Treasury market intermediation and repo financing. The rule is estimated to reduce Tier 1 capital at GSIB holding companies by about $13 billion and substantially more at their bank subsidiaries. (fdic.gov)
  • Financial press coverage characterized this package as one of the largest post‑crisis capital easings, centered on lowering the leverage requirements that had been criticized for penalizing Treasuries and other low‑risk assets and limiting banks’ Treasury‑market participation. (ft.com)
  • In parallel, Fed officials publicly debated more direct relief for Treasuries in the leverage rule, including calls to exempt Treasuries from the eSLR entirely, citing the need to encourage banks to hold more of them, especially in stress. (reuters.com)

These actions are precisely the kind of “small, arcane regulatory changes” to leverage ratios that ease constraints on holding Treasuries and other low‑risk assets that Chamath was pointing to as examples of can‑kicking. Instead of stopping, they were actively pursued and then finalized in 2025.

Because such leverage‑rule tweaks did occur in 2025, the prediction that they would stop (and thus reveal something about who is really driving policy) did not come true.