Federal Reserve Vice Chair for Supervision Michelle Bowman has told executives from large U.S. banks that she does not expect the industry to mount another vigorous campaign to seek additional capital relief, according to three people with knowledge of those communications.
Last month the Fed circulated softened versions of its proposed Basel III and global systemically important bank - GSIB - surcharge rules. The central bank estimated the revised drafts would reduce capital requirements at large U.S. banks by roughly 4.8% in aggregate, a marked retreat from the scale of increases outlined in the Fed's 2023 proposal, which had contemplated about 20% hikes.
The benefits of the revised drafts will not be uniform across firms. For example, JPMorgan said on Tuesday that under the new plan its capital level would actually rise by approximately 4% rather than fall. Other executives speaking during earnings this week indicated that the industry is likely to propose some targeted changes and expects to submit feedback during the formal 90-day comment period.
Bowman and other Fed officials have met with bank leaders in recent weeks to explain that regulators have taken steps to address complaints from the industry and to convey that they do not anticipate a reprise of the aggressive tactics that characterized the fight over the 2023 plan, the three people said.
Officials also advised that industry comments, which are due by around mid-June, should be concise and specific, two of the people added. A Fed spokesperson declined to comment.
Context and next steps
The revised drafts move into a formal comment period during which regulated firms and other stakeholders may submit detailed responses. Fed officials have signaled a preference for focused submissions aimed at pinpointing specific technical or operational issues rather than broad, expansive campaigns.
What is clear from the conversations so far
- The Fed has relaxed the earlier 2023 proposals and estimates the net effect is a roughly 4.8% decline in capital levels for large U.S. banks overall.
- Outcomes will vary by institution - JPMorgan projects a roughly 4% increase in its capital level under the new draft.
- Regulators are urging limited and detailed comment submissions, with responses due around mid-June.
The dialogue between regulators and large banks will determine whether further technical adjustments follow before any final rulemaking. For now, Fed officials appear to be seeking a measured, narrow engagement from the industry rather than a repeat of last year's broader campaign.