Recent proposals recommend supplemental leverage ratio (SLR) modifications to stimulate securities and derivatives market liquidity and other beneficial bank services that are alleged to have declined as a consequence of Basel III capital regulations. Proposed SLR changes would reduce the amount of capital required to engage in targeted bank activities. Formal analysis demonstrates that the SLR’s construction may not be the problem. Debt overhang, caused by high bank leverage, and a poorly designed deposit insurance pricing system could be discouraging targeted activities. Analysis shows that target activities could be stimulated by raising the minimum SLR to reduce the debt overhang problem and revising deposit insurance pricing so that premiums better approximate a fair market price for insurance.