The Federal Reserve really wants America's big banks to help fight the coronavirus crisis.
The Fed announced a rule change late Wednesday aimed at giving big banks like JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) the ability to ramp up lending and smooth out turbulence in the Treasury market.
The US central bank will now exclude US Treasuries and deposits left at the Fed from how supplementary leverage ratios are calculated.
In theory, that should give banks more flexibility to make loans and act as market makers.
Banks are getting flooded with deposits from Americans nervous about the pandemic.
That influx forces lenders to set aside ultra-safe assets they can quickly sell in case they were faced with heavy withdrawals, particularly in a bank run. And that leaves banks with less space to make much-needed loans to cash-strapped consumers and businesses.
It also limits big banks' ability to act as market makers -- a critical role given recent turmoil in the Treasury market.
"Liquidity conditions in Treasury markets have deteriorated rapidly," the Fed in a statement.
KBW analyst Brian Kleinhanzl said the rule change shows the Fed "views the largest banks as 'solutions' within the current crisis and not 'causes.'"