Wall Street Urges Easing of US Bank Capital Rules

Key facts

• Large U.S. banks are lobbying the Federal Reserve and other regulators to ease proposed 'Basel Endgame' capital rules.
• Key requests include reducing capital for trading activities and eliminating requirements for unused credit lines.
• Banks argue the proposed rules, while improved from earlier versions, still need technical fixes.
• The Federal Reserve estimates the revised rules would reduce big banks' loss-absorbing capital by approximately 4.8%.
• The deadline for banks to submit formal comments on the proposed rules is Thursday.

Large U.S. banks are making a final push to influence the Federal Reserve's proposed 'Basel Endgame' capital rules, with a formal pitch scheduled for Thursday. The banks aim to persuade regulators to implement tweaks that would reduce the amount of capital they must hold against potential losses. Key requests include lowering capital assigned to trading activities, eliminating requirements for unused credit lines, and adjusting the surcharge for globally interconnected banks. While acknowledging the current proposal is a significant improvement from the stricter 2023 plan, lenders have identified technical issues they want fixed before the comment period closes. Critics, however, argue that easing capital requirements could make firms more vulnerable to risks and potentially restrict lending.