Federal Reserve’s Michelle Bowman Proposes Changes To Bank Capital Rules

Federal Reserve Vice Chair for Supervision Michelle Bowman announced a proposal to revise bank capital rules that determine how much capital large lenders must hold to absorb losses. She said the changes would reduce capital requirements slightly compared with earlier plans.

The plan modifies the Basel framework and the global systemically important bank surcharge, which sets capital buffers for large financial institutions. The Fed will vote on the proposal at a board meeting next week. The earlier draft in 2023 under former official Michael Barr proposed an increase of about 19% in capital requirements. Banks had opposed the proposal, saying it would limit lending. Industry groups, including the Bank Policy Institute and the Financial Services Forum, supported the revised approach.

Senator Elizabeth Warren said the proposal could weaken safeguards introduced after the Global Financial Crisis. The proposal will undergo a 90-day public comment period before finalisation.