Federal Reserve Cuts Proposed Capital Requirements for Largest Banks to 9% in Basel Endgame

Sep 10, 2024, 02:02 PM

The Federal Reserve, along with the FDIC and OCC, has announced a significant revision to its proposed bank-capital rules. The revised plan will impose a 9% increase in capital requirements for the largest U.S. banks, down from the originally proposed 19%. This change comes after substantial pushback from the banking industry and political figures, who argued that the original plan could restrict lending and negatively impact the economy. Smaller banks, those with assets under $250 billion, will be exempt from most new requirements except for recognizing unrealized gains and losses of securities. Federal Reserve Vice Chair Michael Barr stated that the revisions aim to balance regulatory objectives with industry concerns and ensure broad support from the Federal Reserve Board. The revisions include adjustments to the Basel Endgame and the G-SIB surcharge.