Wall Street Regulatory Breakthrough: Fed and Supervisors Ease Basel III Endgame Proposal

American regulatory agencies announced on March 12, 2026, a plan to significantly ease capital requirements for the largest banks, marking a reversal from the strict proposals presented after the 2023 banking crisis. The Federal Reserve (Fed), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) presented a revised draft of regulations known as Basel III Endgame. The new proposal envisages lower burdens for Wall Street financial institutions than the original 2023 draft, which sparked unprecedented resistance from the banking sector. This decision is seen as a key victory for large banks after months of intense lobbying against the restrictions. The original proposals to tighten capital regulations emerged in July 2023, in response to the failures of Silicon Valley Bank and Signature Bank. At the time, the Fed's Vice Chair for Supervision, Michael Barr, argued that higher requirements were essential for system stability. However, the banking sector, represented among others by the Bank Policy Institute, launched a broad campaign against the changes, claiming they would limit lending and weaken the economy.

Announcement of the changes came under the leadership of Michelle Bowman, who currently serves as the Fed's Vice Chair for Supervision following Michael Barr's resignation in February 2025. Michelle Bowman, nominated for this position by President Donald Trump, has criticized the previous regulatory approach from the outset, advocating for more pragmatic supervision. The new plan also gains support from Federal Reserve Chairman Jerome Powell, who previously signaled the need for broad changes to the draft to achieve consensus within the Board of Governors. „Today's proposal reflects our commitment to creating a regulatory framework that is both effective and proportionate to risk” — Michelle Bowman via Reuters

The reform primarily concerns the way the largest banks calculate cash reserves they must maintain as a buffer against potential losses. While the original plans from the Joe Biden administration era anticipated a significant increase in required capital, the current revision drastically reduces these expectations, which is expected to allow banks to free up billions of dollars for other purposes. Representatives of the banking industry welcomed the announced changes, pointing to the need to maintain the competitiveness of the American financial sector. Evolution of the Basel III Endgame Draft: Regulatory Approach: Strict Requirements (2023 Proposal) → Eased Requirements (2026 Revision); Fed Supervision Leadership: Michael Barr (until February 2025) → Michelle Bowman (from 2025)

Path to the Basel III Endgame Revision: July 2023 — Original Proposal; February 2025 — Barr's Resignation; March 17, 2025 — Bowman's Nomination; March 12, 2026 — Announcement of Revision