U.S. financial regulators, including the Federal Reserve, proposed lowering capital requirements for the nation's banks. This marks a significant departure from the stricter regulatory environment established after the 2008 financial crisis.
The plan reduces aggregate capital requirements for the largest banks by 4.8%. Regional banks would see a 5.2% reduction in required capital. Smaller banks face a 7.8% cut to their capital mandates.
Regulators aim to boost lending and economic activity by aligning capital rules with actual risk. The proposal revises the Basel III endgame framework and adjusts surcharges for globally systemic important banks.
Fed Vice Chair Michelle Bowman argues the recalibration improves regulatory efficiency. Fed Governor Michael Barr warns the changes could weaken financial system resilience.