US Fed's Bowman unveils relaxed bank capital rules

• Capital requirements for large banks will fall by a 'small amount' in aggregate, reversing the direction of earlier draft rules that would have increased capital levels
• Bowman, appointed by President Trump, argues the changes eliminate overlapping standards and better calibrate requirements to actual bank risks
• The Fed official stated that excessive capital requirements impair banks' fundamental function of providing credit to the real economy

Summary

Key Development:

Federal Reserve Vice Chair for Supervision Michelle Bowman announced on March 12, 2026, that revised bank capital requirements will decrease slightly from earlier proposals, marking a significant victory for large Wall Street banks. The changes affect the Basel rules and GSIB (Global Systemically Important Bank) surcharge, which dictate capital reserves banks must hold against potential losses.

Main Details:

Speaking at the Cato Institute in Washington, Bowman described the revisions as a "sensible recalibration" that will lower large bank capital requirements by a "small amount" in aggregate. The updated rules aim to eliminate overlapping standards and better align requirements with actual bank risks.

Key Figure:

Bowman, appointed to her role by Republican President Donald Trump in 2025, argued against excessive capital requirements, stating they "impair the banking system's fundamental function of providing credit to the real economy."

Market Implications:

This represents a major policy shift favoring the banking sector. The relaxed capital requirements will free up capital that banks can deploy for lending activities rather than holding in reserve. Large banks, which had lobbied against stricter capital requirements in earlier drafts, successfully pushed back against more stringent regulations.

Sector Impact:

The decision affects major U.S. banking institutions, particularly those classified as globally systemically important banks. The changes suggest a more industry-friendly regulatory approach under the current administration, contrasting with previous proposals that would have increased capital buffers.