Federal bank regulators took a significant step toward deregulation by proposing sweeping changes to capital requirements for banks of all sizes. The Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency unveiled three proposals aimed at modernizing the framework, enhancing risk sensitivity, and reducing regulatory burden while implementing the final elements of the Basel III international standards.

The moves represent a victory for the banking industry after years of lobbying against stricter rules proposed under the previous administration. The largest U.S. banks, including global systemically important banks like JPMorgan Chase, Goldman Sachs, and Morgan Stanley, would see their capital requirements drop by an average of 4.8 percent under the plans. This could free up roughly $20 billion in capital across the sector, according to analyses. Larger regional banks such as PNC Financial Services and Truist Financial would face a 5.2 percent reduction, while banks with less than $100 billion in assets could see declines of up to 7.8 percent.

Fed Vice Chair for Supervision Michelle Bowman, a Trump appointee who spearheaded the overhaul, emphasized that the changes better calibrate capital to actual risks. "These proposals provide more efficient regulation and banks that are better positioned to support economic growth," she said previously. Officials argue the adjustments will encourage lending to businesses and households, countering the migration of activities to less-regulated non-bank sectors like private credit, and maintain robust safety levels far above pre-2008 crisis standards.

The proposals revise the contentious "Basel III endgame" rules first drafted in 2023, which had called for capital increases of up to 20 percent before scaling back. Delays pushed the effort into the current Trump administration, where regulators aligned with industry calls for simplification. The Fed board approved the notices in a 6-1 vote, with dissenting Biden appointee Michael Barr warning of potential risks to the global financial system.

Banking groups hailed the development as a step toward balanced oversight that could unlock billions for dividends, share buybacks, and expanded credit amid economic pressures. Mortgage and business associations also praised the lighter touch on residential and commercial lending activities.

The public has 90 days to comment, with responses due by June 18. Final rules would follow after review, potentially alongside updates to stress testing. Banks currently hold substantial excess capital estimated at $175 billion, suggesting room for the reductions without compromising stability.

Proponents view the shift as fulfilling U.S. Basel commitments while prioritizing American competitiveness and growth. The changes come as regulators also eye broader deregulatory efforts under President Trump to bolster traditional banks against fintech and shadow banking rivals.