The Federal Reserve develops a modified capital framework for major U.S. banks which replaces the previous stringent proposal from the Biden administration according to insiders.
The revised plan will become available during the first quarter of 2026 to transform the Basel III international banking rules’ final phase risk-based capital requirement calculation process. The effort led by Vice Chair for Supervision Michelle Bowman focuses on streamlining the 1,087-page original proposal to decrease Wall Street’s regulatory compliance requirements.
The Basel III endgame emerged after the 2008 financial crisis to strengthen the worldwide banking system. The regulatory framework demands enhanced capital requirements along with stricter leverage and liquidity standards. The worldwide implementation of many Basel III components has been delayed in the United States because financial institutions have advocated for less stringent standards.
The new rules will affect banking institutions that possess assets exceeding $100 billion including JPMorgan Chase and Bank of America and Goldman Sachs. The earlier proposal demanded banks to maintain $1 trillion worth of extra capital for protecting their lending and trading operations from potential losses.
The banking industry has consistently opposed the strict regulatory framework because it believes it will reduce credit access and slow down economic expansion. The Federal Reserve’s new regulatory direction represents a major change from Biden-era policies while demonstrating increased central bank support for regulatory adjustments that benefit industry operations.
