U.S. Federal banking regulators today proposed a series of changes to the rules governing bank capital requirements, seeking to streamline regulations and better align them with risk although maintaining financial stability. The proposals, issued jointly by the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency, target banks of all sizes and come more than a decade after significant increases in capital requirements following the 2008 financial crisis.
The agencies stated the changes aim to improve the risk sensitivity of the capital framework, reduce regulatory burden, and enhance consistency across banks. A key component of the proposals would involve the largest, most internationally active banks utilizing a single set of calculations for risk-based capital requirements, rather than the current two sets. Regulators likewise intend to refine the calibration of the framework to more accurately capture credit, market, and operational risks.
A second proposal focuses on banks beyond the largest institutions, seeking to better align capital requirements with the risks associated with traditional lending activities. This includes modifications to capital requirements for mortgage servicing and origination, which would also apply to banks utilizing the community bank leverage ratio framework. Notably, certain large banks would be required, after a transition period, to incorporate unrealized gains and losses on specific securities into their regulatory capital levels.
The Federal Reserve Board also issued a separate proposal focused on improving the measurement of systemic risk for the largest and most complex banks, which are subject to additional capital requirements. This aims to refine the framework used to determine those supplemental capital levels.
While the agencies anticipate a modest overall decrease in the amount of capital held by the banking system, they emphasized that capital levels would remain substantially higher than they were prior to the 2008 financial crisis. The proposed changes are projected to modestly reduce capital requirements for large banks and more moderately reduce them for smaller banks, reflecting their differing lending profiles. The FDIC, in a 2025 speech, highlighted the importance of addressing interest rate and liquidity risk, concentrations of assets and deposits, and inadequate capital as key lessons from past financial crises.
The proposals build on reforms enacted in the wake of previous financial crises. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), passed after the savings and loan crisis of the late 1980s and early 1990s, expanded the Federal Reserve’s regulatory authority over commercial banks acquiring thrifts. More recently, the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in response to the 2008 crisis, brought about major changes in banking and financial regulation, including stress testing requirements for large banks.
The agencies have published aggregated data used to inform the proposals and are soliciting public comment on all three proposals, with a deadline of June 18, 2026.
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