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US bank regulators to unveil long-awaited capital rule rewrite
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US bank regulators to unveil long-awaited capital rule rewrite
Mar 19, 2026 3:29 AM

WASHINGTON, March 19 (Reuters) - U.S. President Donald Trump's bank regulators are set to formally unveil softened new draft capital rules on Thursday, in a potential victory for Wall Street banks that could unleash billions of dollars for lending, share buybacks and dividends.

The "Basel" and related capital proposals are expected to modestly reduce the amount of money big banks must set aside for potential losses, Federal Reserve regulatory chief Michelle Bowman said last week, a stunning turnaround for an industry that had faced double-digit hikes under the original 2023 draft. 

The Fed, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency are set to approve the Basel draft Thursday morning and begin soliciting feedback, kicking off another potentially frenetic round of industry lobbying as banks gain clarity over how they will fare versus their peers. 

The overhaul follows a years-long Wall Street bank campaign to ease rules introduced after the 2008 financial crisis which they say are stifling the economy. Bowman said the changes would better calibrate requirements in line with risks, although critics say they will weaken financial system safeguards just as geopolitical and private credit risks are surging.

"The initial proposals were pretty punitive and to their credit the regulators have taken their time to try to get it right. Who knows if it will be perfect but certainly they are listening," KBW analyst Chris McGratty said.

Regulators have tried for years to implement the "Basel Endgame," the final piece of international capital standards introduced following the crisis, which focuses on how banks assess and allocate funds to credit, market and operational risks. 

Bowman's Democratic predecessor Michael Barr tried to advance a plan that would have hiked capital for some banks by as much as 20%, but lenders launched an unprecedented campaign to weaken the rule, winning over many lawmakers and sowing division among the regulators. That dragged the project into the Trump administration, which has sided with the industry. 

The Fed ⁠also plans on Thursday to propose tweaks to the "GSIB surcharge" levied on the eight riskiest global U.S. banks by updating some economic inputs and adjusting how short-term funding risk is calculated. Combined, the changes should result in big bank capital falling slightly or coming out flat.

Analysts at Morgan Stanley this month estimated that large banks currently hold around $175 billion in excess capital, and clarity on the rules could allow them to start freeing up that money for lending and share buybacks.

McGratty said the eased capital rules would be much less onerous on banks than the previous plan, "but the devil will be in the details."

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