US regulators propose 5% cut in capital requirements for biggest banks
Updated
Updated · InvestmentNews · May 7
US regulators propose 5% cut in capital requirements for biggest banks
16 articles · Updated · InvestmentNews · May 7
The March proposal from the Federal Reserve would ease reserve and some leverage rules for major lenders and simplify parts of the Basel III endgame framework.
Greenwich Associates said the changes could free balance-sheet capacity, boost market-making and trading, and help Wall Street banks win back business from nonbank and private credit rivals.
Supporters say lower requirements could improve Treasury market liquidity and growth, while critics warn weaker post-2008 safeguards may mainly fuel buybacks and dividends; the plan now enters public consultation.
As the Fed eases bank rules, will a Wall Street boom come at the cost of Main Street's financial safety?
With U.S. banks set to diverge from global standards, are we sparking a 'race to the bottom' in financial regulation?
Will freeing up $100 billion in bank capital actually boost lending, or will it fund another record year of shareholder payouts?
Basel III 2026 Reforms: Simplified Rules Reduce Capital Burdens, Aim to Boost Lending and Housing
Overview
In March 2026, U.S. regulators revised the Basel III capital framework to reduce capital requirements by 4.8% to 7.8% for most large and mid-sized banks, simplifying calculations and lowering risk weights for corporate exposures. A key change assigns Mortgage Servicing Assets a standardized 250% risk weight, encouraging banks to increase mortgage lending and servicing. While most banks benefit from capital relief, some large regional banks face higher requirements due to stricter accounting for unrealized losses, a response to the 2023 Silicon Valley Bank collapse. The reforms aim to balance economic growth with financial stability, now open for public comment until June 18, 2026.