Wall Street bank capital would fall 4.8% under softened capital rules unveiled by U.S. bank regulators on Thursday, freeing up billions in dollars for lending, dividends and share buybacks in a stunning victory for the industry which had faced double-digit hikes under the original 2023 plan.
Capital levels at larger regional banks would fall by 5.2%, while banks below $100 billion in assets would enjoy a 7.8% decline in their capital requirements under the proposals.
The “proposals under consideration would further enhance and streamline the capital framework while ensuring that U.S. banking organizations continue to be safe, sound, and able to support the U.S. economy across all economic conditions,” Fed staff wrote in a briefing memo for the board.
The Fed, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency are set to approve the Basel draft Thursday morning and begin soliciting feedback, kicking off another potentially frenetic round of industry lobbying as banks gain clarity over how they will fare versus their peers. The overhaul follows a years-long Wall Street bank campaign to ease rules introduced after the 2008 financial crisis which they say are stifling the economy. Critics say they will weaken financial system safeguards just as geopolitical and private credit risks are surging.
