Regulators release proposals to ease bank capital requirements

Banking regulators advanced three proposed rules last week to lower capital requirements for banks of all sizes as part of an effort to boost lending activity.

The first proposed rule would implement the Basel III endgame agreement by revising the risk-based capital requirements for the largest banks. The second proposal would revise how the surcharge for globally systemically important banks, or GSIBs, is calculated. The third proposal would revise the risk-based capital treatment of certain assets and other exposure categories under the standardized approach, which applies to most banks.

According to a board memo by Federal Reserve staff, the proposals would lower aggregate common equity tier 1 capital requirements for category I and II banks by 4.8%, for category III and IV banks by 5.2%, and for smaller banks by 7.8%. (Banks that have elected or later elect the Community Bank Leverage Ratio would not be affected; changes proposed in 2025 to that standard are still pending.)