US financial regulators released proposals Thursday to loosen some planned capital rules for banks, while partially implementing a set of international standards.
The latest move follows other efforts under President Donald Trump’s administration to adjust banking rules in ways that critics worry could affect abilities to identify or endure a crisis.
One of the plans aims to simplify how major banks calculate their compliance with capital requirements, while another suggests changes to a capital requirement surcharge applied to the biggest and most complex banks.
Overall, the proposals would decrease the capital requirements for the largest banks slightly.
The aim is to “modernize the bank capital requirements that are the foundation of our regulatory framework,” said the Federal Reserve’s Vice Chair for Supervision Michelle Bowman in prepared remarks to a regulators’ board meeting.
“The proposal includes modest deviations from the 2017 Basel agreement,” said Bowman in her remarks.
She was referring to what is known as the “Basel III Endgame,” which aims to boost banking system stability and came in response to the financial crisis of 2007-2008.
“Many of these have only a minor effect on capital but are designed to address US-specific implementation issues,” Bowman said.
But Fed Governor Michael Barr, who is Bowman’s predecessor in the vice chair for supervision role, argued in a separate statement that the “significant reductions in capital requirements are unnecessary and unwise.”
“Today’s proposals, if adopted, would harm the resilience of banks and the US financial system,” he warned in prepared remarks.
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