From CNBC: 2024-09-10 10:38:59

Federal Reserve Board Vice Chair for Supervision Michael S. Barr testifies at a Senate Banking, Housing and Urban Affairs Committee hearing on “Recent Bank Failures and the Federal Regulatory Response” in Washington on March 28, 2023. A top Fed official revealed changes to proposed U.S. banking regulations that halve extra capital required for large institutions, compared to the original Basel Endgame plan introduced in July 2023 (19% increase). Now, the proposal includes a more modest 9% increase in big bank capital. The regulatory overhaul aims to tighten oversight of risky lending and trading activities while balancing the benefits and costs of increasing capital requirements. Trade organizations warned that the original plan could have made loans more expensive or harder to obtain, potentially pushing activity to non-bank providers. Industry executives, including JPMorgan Chase CEO Jamie Dimon, led efforts to push back against the earlier proposal. The updated plan also benefits regional banks with $100 billion to $250 billion in assets, excluding them from the latest proposal. However, they must recognize unrealized gains and losses on securities in their regulatory capital, potentially increasing capital requirements by 3% to 4% over time. This adjustment responds to midsized bank failures last year due to deposit runs linked to fears about unrealized losses on bonds and loans. Stay tuned for further updates on this developing story.

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