Trump's regulators are working on the biggest overhaul of U.S. capital rules since the 2008 recession

"As President Donald Trump's regulators revamp bank rules, big lenders expect their capital requirements could fall, in a stunning victory for the industry which faced a big hike under former President Joe Biden, according to senior industry executives. Aiming to cut red tape that Trump's agency picks say is hurting the U.S. economy, they are working on the most sweeping overhaul of U.S. capital rules since the global financial crisis of 2008."

"The country's largest lenders, which have lobbied hard for the long-sought review, are optimistic that the changes combined will result in their capital levels remaining flat or falling, said six industry and regulatory sources, including three top bankers. That expected outcome, reported here for the first time, marks a dramatic turnaround for the industry which faced a 19% hike in 2023 under the draft Basel capital rules which proposed changes to how big banks gauge lending and trading risks."

"Big banks have long complained that capital rules are excessive and poorly calibrated, and that some of that cash could better serve the economy through lending. They also argue that they weathered the COVID-19 economic shock just fine. Critics say efforts to chip away at the capital regime are dangerous, and could leave the industry vulnerable at a time when the outlook for the U.S. economy is growing cloudy."

President Trump's regulatory team is rewriting U.S. bank capital rules to cut red tape and ease burdens on large lenders. Proposed changes include narrowing the "Basel Endgame" capital hikes, reducing a surcharge on risky global banks, shrinking a key leverage constraint, and overhauling annual stress tests. Major banks expect the combined changes could keep capital levels flat or lower, potentially freeing billions for lending and trading. Banks argue current requirements are excessive and hinder credit supply. Critics warn that weakening capital standards could increase systemic vulnerability amid economic uncertainty.

Read at Fast Company