U.S. regulators loosen capital rules
U.S. banking regulators moved to relax post‑crisis capital requirements and opened a public comment on proposals to modernize the regulatory capital framework—changes are aimed at freeing balance‑sheet capacity and could unlock extra funding for IT and platform investment. The coordinated push is packaged as a risk‑based update to capital rules and is advancing through formal agency channels this week. (nytimes.com) (federalreserve.gov)
Agencies issued three separate notices of proposed rulemaking on March 19, 2026 and set a public-comment deadline of June 18, 2026. (federalreserve.gov) The first proposal would require Category I and II banking organizations to calculate a single set of risk‑based capital ratios using an “expanded risk‑based approach” that explicitly includes credit, operational, market and CVA risks. (federalreserve.gov) Under the package the standardized approach would no longer apply to Category I and II firms and the advanced approaches would be removed from the capital framework, while all other banks would have the option to adopt the expanded approach. (federalreserve.gov) The market‑risk capital regime in the proposals would apply to banking organizations with more than $5 billion of trading activity or trading activity equal to or greater than 10% of total assets. (federalreserve.gov) Regulators’ modelling shows aggregate required capital would drop: Wall Street banks’ capital needs are projected to fall about 4.8%, larger regional banks about 5.2%, and banks with less than $100 billion in assets about 7.8%. (money.usnews.com) Fed staff estimated the eight most‑interconnected U.S. banks hold roughly $1 trillion of combined capital and that required capital for those firms could fall by about $20 billion under the proposals, while Democratic Governor Michael Barr estimated the reduction could be closer to $60 billion when other policy changes are included. (money.usnews.com) Analysts at Morgan Stanley have estimated large U.S. banks currently hold about $175 billion in excess capital, a figure market participants cite when projecting how much capital could be redeployed once the rules are finalized. (cnbc.com) The Fed’s third proposal would revise how the U.S. GSIB surcharge is measured and calibrated to better align additional surcharges with systemic risk, potentially changing the incremental capital that the largest, trading‑active firms must hold. (federalreserve.gov)
