(13 March 2026 – United States) The Federal Reserve is preparing to slightly reduce capital requirements for the largest US banks, marking a shift in post-financial crisis regulation aimed at encouraging lending and improving competitiveness with private credit providers.
In a speech outlining the changes, Michelle Bowman said planned implementation of the Basel III Endgame would technically raise minimum capital levels, but this increase would be offset by adjustments elsewhere in the framework. Proposed revisions to the surcharge applied to the biggest banks would modestly lower the additional capital buffer required.
The changes would affect institutions including JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley, with Bowman indicating the combined impact would “decrease the requirements by a small amount” for the largest lenders.
Part of the reform involves recalibrating the capital buffer tied to short-term funding risks and adjusting it for inflation and balance sheet growth, measures designed to better align capital requirements with underlying risk.
The proposals follow significant lobbying from the banking industry after earlier plans in 2023 would have increased minimum capital requirements for major US lenders by around 19 percent. Regulators later softened the approach in response to industry concerns that tighter rules could restrict credit and push activity toward less regulated non-bank lenders.
Bowman noted that post-2008 reforms had significantly strengthened bank resilience but cautioned that excessive capital requirements can create unintended effects. “Continuously increasing capital levels without a specific purpose imposes real economic cost,” she said, adding it “constrains credit availability, pushes activity into the less-regulated nonbank sector and layers on complexity and costs without meaningfully enhancing safety and soundness”.
Detailed proposals are expected to be released by US regulators in the coming weeks, with smaller and less complex banks likely to see slightly larger reductions in capital requirements than the biggest Wall Street institutions.