Bank capital rules loosen
U.S. regulators finalized a rewrite that cuts Wall Street bank capital requirements by about 4.8%, freeing up billions for lending, dividends and buybacks — a reversal from earlier proposals. That change could accelerate middle‑market lending and M&A activity, potentially loosening credit for small businesses and creating pockets of opportunity for private-credit strategies. (reuters.com)
March 19, 2026 — the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency issued a joint notice of proposed rulemaking to modernize U.S. regulatory capital standards. (occ.gov)) The package consists of three parallel proposals: a revised U.S. Standardized Approach for non‑Category I/II banks, a new Expanded Risk‑Based Approach (ERBA) for Category I and II firms, and an updated market‑risk framework that includes optional adoption pathways for other banks. (occ.gov)) Under the Standardized Approach proposal, corporate exposures would carry a 95% risk weight (down from 100%), certain other assets would move to a 90% risk weight, residential mortgage risk weights would become more granular, and the required capital deduction for mortgage servicing assets would be removed for firms that opt into the new frameworks. (occ.gov)) The ERBA would replace the current dual‑framework requirement for Category I/II banks with a single risk‑based framework and would eliminate the advanced approaches from the capital rule, while the revised market‑risk proposal targets firms with at least $5 billion in trading assets plus trading liabilities or where those trading positions exceed 10% of total assets. (occ.gov)) The agencies set a formal public comment deadline of June 18, 2026 for the March 19 proposals, with the interagency process described publicly as a standard consultation period ahead of any final rulemaking. (occ.gov)) The Fed’s Vice Chair for Supervision, Michelle Bowman, framed the package as modernizing capital rules while keeping the framework “robust” in prepared remarks, whereas Governor Michael Barr publicly said he could not support the proposals and quantified that, combined with recent eSLR changes, the package would reduce Tier 1 capital requirements by about 6.0%, roughly $60 billion. (federalreserve.gov)) Regulatory trade groups and industry observers characterize the NPRMs as the agencies’ U.S. implementation of the Basel III endgame reforms and a policy shift intended to reduce perceived disincentives to lend, with lawyers and banks noting the final text and industry comments will shape adoption for different bank sizes. (bankingjournal.aba.com))
