By Pete Schroeder
WASHINGTON (Reuters) -The Federal Reserve's top regulatory official said Thursday that bank agencies are poised to unveil a more industry-friendly version of contentious capital rules known as "Basel III Endgame" by the end of 2025 or early 2026.
Fed Vice Chair for Supervision Michelle Bowman said the central bank is actively working with colleagues at the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency on a re-proposal of that rule, which would
implement global standards on how banks should measure their risk and assign capital accordingly.
Under the Biden administration, the Fed and other regulators attempted to advance a version of the rule that would have significantly increased capital requirements at large banks. But that effort was ultimately scrapped amid intense opposition from the banking industry, as firms called the hikes unjustified.
Now, regulators tapped by President Donald Trump, including Bowman, are looking to craft a rule that is more responsive to industry concerns and likely will result in a much lighter capital impact on banks.
Speaking at a conference hosted by Georgetown University, Bowman said regulators need to consider "rightsizing" several capital requirements imposed on larger banks following the 2008 financial crisis, and argued the post-crisis framework is due for reconsideration.
"We have a good perspective on what’s been working and what could be improved," she said.
Bowman is leading an effort among bank regulators to reconsider a host of bank requirements, as well as overhaul how government examiners monitor banks and order fixes. However, she framed the effort not as a weakening of rules, but rather a reconsideration to ensure they are as effective and efficient as possible.
“I don’t think that just trying to make sure that all of our regulations work well together and are transparent and we can hold our banks accountable as well as our supervisors accountable is a lighter touch," she said. “It’s not my expectation that we’ll have fewer requirements, or that you know that capital will go down as a result of the work that we’re doing, necessarily, but we want to make sure that all of our requirements work together."
(Reporting by Pete Schroeder; Editing by Andrea Ricci and Nick Zieminski)
