Oh, it's way worse than that. Under Federal bank regulations, a US bank must have Tier 1 Capital ratio of at least 4%. A leverage ratio of 4% would mean that f

Oh, it's way worse than that. Under Federal bank regulations, a US bank must have Tier 1 Capital ratio of at least 4%. A leverage ratio of 4% would mean that for every $1 of capital that a bank holds in reserve, the bank can lend $25. (1/25 = 4%)