Key Facts
• August 1, 2025: Bloomberg reports Federal Reserve’s new capital regulation efforts.
• Goal: Simplify risk-based capital requirements for major banks.
• Previous 1,087-page proposal from two years ago to be discarded.
• New proposal expected by Q1 2026.
• Led by Vice Chair for Supervision, Michelle Bowman.
• Based on Basel III standards, finalized in 2017.
• Aims to strengthen banks’ ability to absorb losses and protect the financial system.
• Applies to banks with assets exceeding $100 billion, including JPMorgan Chase, Bank of America, and Goldman Sachs.
• Proposal may require nearly $1 trillion in additional capital for major banks.
• Banking industry opposes stricter regulations, citing economic disruption concerns.
Summary
The U.S. Federal Reserve has initiated the drafting of a new risk-based capital regulation proposal aimed at easing the burden on major banks. The effort, led by Vice Chair for Supervision Michelle Bowman, seeks to simplify capital requirement calculations and replace a 1,087-page proposal from two years ago. The new framework, expected by Q1 2026, aligns with Basel III standards finalized in 2017, which were designed to enhance financial stability following the 2007–2009 global financial crisis. The regulation targets banks with assets exceeding $100 billion, such as JPMorgan Chase, Bank of America, and Goldman Sachs, potentially requiring them to raise nearly $1 trillion in additional capital. While the proposal aims to bolster the financial system’s resilience, the banking industry strongly opposes it, arguing that stricter requirements could hinder economic growth.
