SFA Member Alert: Fed Vice Chair Bowman Previews Basel III Endgame Proposal

SFA Member Alert:

Fed Vice Chair Bowman Previews Basel III Endgame Proposal

Michelle Bowman today previewed regulators’ forthcoming proposal to update U.S. bank capital rules in the Basel III Endgame framework. The proposal is expected to be released late next week, followed by a 90-day public comment period.

Bowman said the revised framework would apply primarily to the largest banks, while regional banks would move to an updated version of the current standardized capital approach. She indicated that, in total, the changes would likely reduce capital requirements for the largest banks by a small amount, reflecting what she described as a recalibration of existing rules.

The proposal is expected to include changes to the G-SIB surcharge, adjustments to operational and credit risk capital, and updates to mortgage-related capital requirements, while also simplifying how banks calculate capital by eliminating overlapping frameworks.

Bowman argued that capital requirements have risen significantly in recent years and warned that excessively high requirements can reduce banks’ ability to provide credit to households and businesses. She also emphasized that regulators are seeking industry feedback during the comment period before finalizing the complex rule changes.

SFA will review the proposal and provide members with additional analysis once it is released.