US Regulators Unveil Bank Capital Modernization Proposals

U.S. federal banking regulators unveiled three proposals on Thursday to modernize capital requirements for banks of all sizes, aiming to streamline calculations and better align rules with actual risks while implementing elements of the international Basel III standards.

The Federal Deposit Insurance Corporation, the Federal Reserve Board and the Office of the Comptroller of the Currency jointly issued the proposals, which target improvements in how banks assess and hold capital to absorb potential losses. The first proposal focuses on the largest and most internationally active banks, replacing two separate sets of compliance calculations with a single, unified approach for risk-based capital requirements. This change would enhance risk sensitivity across credit, market and operational risks, with market risk rules applying only to institutions with significant trading activity. Other banks could opt in voluntarily. Regulators estimate this would simplify compliance and reduce operational burdens without compromising safety.

The second proposal applies more broadly to midsize and smaller banks, adjusting capital requirements to reflect the risks associated with traditional...