The Federal Reserve's revised drafts would cut capital requirements for the biggest US banks by about 4.8% — but Fed Vice‑Chair for Supervision Michelle Bowman told Wall Street CEOs she does not expect them to press for additional relief. The reworked package pares back several increases floated in 2023, adjusting the G‑SIB surcharge measurement and treatment of certain assets and fee‑based income. Bowman said she will accept targeted comments during the roughly 90‑day consultation window and hopes to finalise the rules this year.

What Bowman proposed - Bowman unveiled a reworked package of capital rules that pares back many increases originally floated in 2023, touching the Basel III "endgame" framework and the Global Systemically Important Bank (G‑SIB) surcharge. - The Fed has said the revised drafts would lower the aggregate capital burden on the biggest U.S. banks by around 4.8% compared with the earlier design. - Key technical shifts: removal of the dual‑stack approach (no longer forcing banks to hold capital under two systems), recalibration of G‑SIB surcharge measurement (timing of balance‑sheet snapshots and surcharge buckets), and adjusted treatment of mortgage servicing rights and certain fee‑based income for capital purposes. - The Fed argues these changes increase risk sensitivity without broadly weakening the safety net; Bowman described the package as a correction to an "excessive build‑up" of industry capital since 2019. Who wins and who loses - Industry groups that opposed the 2023 draft praised Bowman’s moves as a major victory and said they will parse the draft and press for clarifications during the comment period. - JPMorgan said the new design would lift its capital ratio by about 4%; CEO Jamie Dimon has nonetheless described parts of the proposal as "very flawed," indicating the bank will still press for changes. - Other large banks face smaller gains or unchanged requirements, creating friction within the industry between those who benefitted and firms left behind. Political pushback and watchdog warnings - Lawmakers and consumer advocates reacted quickly. Senator Elizabeth Warren warned that easing capital rules risks weakening post‑crisis safeguards. - The 2023 plan prompted extensive industry pushback (advertising, Capitol Hill lobbying and threats of litigation). Bowman’s rework appears aimed at ending that drawn‑out fight and limiting further public spectacle. - Fed officials told bank executives they do not expect a reprise of the intense tactics used against the prior proposal and have asked that industry comments be narrow and specific. Bowman said she will accept points of criticism while moving to finalise the rule set within the year.

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Bowman called the proposal "a very middle‑of‑the‑road, reasonable proposal," urged banks to make narrow, specific submissions during the roughly 90‑day comment period and signalled an aim to finalise the rules this year.

This article was created with AI assistance.