Washington prepares $175B break for big banks — weakening protections against financial crisis
US regulators are preparing a softer rewrite of Basel III endgame rules, potentially freeing up $175 billion in capital for large banks.Summary
US regulators, led by Federal Reserve Vice Chair Michelle Bowman, are drafting a revised version of the Basel III endgame capital rules that is significantly softer than the 2023 proposal. This new approach could result in capital requirements remaining flat or slightly decreasing for large banks, potentially unlocking over $175 billion in excess capital industry-wide and reducing surcharges for the largest global banks by about 10%. Concurrently, Treasury officials are reviewing liquidity rules, suggesting banks could receive regulatory credit for collateral already prepositioned at the Federal Reserve's discount window, effectively treating this borrowing capacity as usable liquidity. While proponents argue this eases economic costs and supports credit supply, critics note it reduces built-in friction and safety buffers just three years after regional bank failures like Silicon Valley Bank. The shift prioritizes efficiency and credit creation over maximum safety, relying more heavily on the Fed's backstop architecture in times of stress.
(Source：CryptoSlate)