New Bank Capital Proposal Expected in the Coming Months
October 28, 2025
According to an October 22 Bloomberg article, the Federal Reserve has shared with other regulators an outline of a revised bank capital proposal, which would significantly reduce bank capital requirements originally proposed under the Biden administration.
The new proposal, which represents the Fed’s latest attempt to implement Basel updates in the U.S., would result in a 3% - 7% increase in capital requirements for most big banks.
- This estimate is considerably lower than the 19% increase in the 2023 proposal. (A reproposal last fall would have likely reduced the capital increase to 9%.)
Go deeper: The regulators are weighing an opt-out for mid-sized banks if they adhere to certain requirements.
- Banks are also urging the elimination of the dual capital calculation from the Biden-era proposal, where the higher of the standardized and advanced approaches would have to be applied.
What’s next: The article states that the Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) are in general agreement regarding the contours of the proposal.
- Fed Vice-Chair of Supervision Michelle Bowman has indicated the proposal’s release in Q4’25 or Q1’26.
- CREFC will monitor developments closely and provide comments on elements of the proposal that have CRE implications.
In other capital-related news, the Fed released on Friday the models and methodologies behind the bank stress tests.
- The Fed will now seek public comment on these scenarios each year before finalizing them. As reported by Politico, this move marked “some of the most drastic changes to the annual exercises since the 2008 financial crisis.”
- Fed Governor Michael Barr, the previous Vice-Chair of Supervision, dissented, stating that these process changes would make the stress tests “weaker and less credible.”
Please contact Sairah Burki (sburki@crefc.org) with questions.