Banking Agencies Set to Unveil Sweeping Bank Capital Overhaul
March 17, 2026
The U.S. banking agencies will release next week long-awaited proposed changes to the bank capital framework.
- The Federal Reserve announced last Thursday a March 19 (10am ET) Board meeting to vote on releasing the proposals.
- The Federal Deposit Insurance Corp (FDIC) shared details on Friday about a meeting at the same time.
In a Q&A session following a March 12 speech at the Cato Institute, Fed Vice-Chair Michelle Bowman said a 90-day comment period would follow the publication of the proposals.
- She did not provide an implementation date, stating they were trying to coordinate with other jurisdictions.
Why it matters: The capital revisions, which Bowman described as a “recalibration,” are designed to loosen restrictions, spur more lending, and pull mortgage business back into the traditional banking system.
- A revised Basel III framework implements the final phase of the 2017 international agreement, with U.S.-specific adjustments. It also establishes a single approach (rather than mandating two sets of risk-based capital ratios) to calculate the risk-based capital requirements for the largest banks.
- A standardized approach proposal modifies risk-based capital calculations for most banks, “improving risk alignment while preserving a simple framework.”
- The changes address “critical categories” of bank lending, including mortgages, consumer lending, and business lending.
- They also require large banks to include elements of accumulated other comprehensive income (AOCI) in common equity tier-1 capital, aligning with requirements at the largest institutions.
- The above proposals eliminate any requirement to deduct mortgage servicing assets from regulatory capital, instead assigning a 250 percent risk weight to these assets.
- A G-SIB surcharge proposal aligns this calculation with the international method. It also indexes the surcharge to economic growth going forward
Impact on Bank Capital: Bowman stated that these changes are expected to produce a "small increase" in capital for large banks. The increase, however, will likely be offset by the G-SIB surcharge modifications.
Broader context: The proposals reflect the administration’s deregulatory push.
- As Bowman noted, regulators have reduced the enhanced supplementary leverage ratio for G-SIBs and proposed changes to the stress tests.
- As covered in previous CREFC Policy & Capital Markets briefings, the banking regulators have reduced staff in enforcement divisions and directed supervisors to focus only on “material financial risks.”
What they are saying:
- As reported by Politico, bank trade groups welcomed the approach in a joint statement, calling it "a thoughtful, bottom-up approach."
- However, Senate Banking Committee ranking member Elizabeth Warren (D-MA) stated: "Trump's bank regulators, once again, are handing the big banks exactly what they want — a weak rule that fails to address the severe flaws in the capital framework."
What’s next: CREFC will issue an Alert following publication of the proposals.
- We will follow up with a more detailed analysis as we develop our feedback on the proposal.
If you have questions or would like to join the Bank Capital Working group, contact Sairah Burki (sburki@crefc.org).