U.S. bank regulators are advancing toward a new proposal for Basel endgame rules that would govern how large banks calculate risk and maintain capital reserves. The Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency submitted regulatory proposals to the Office of Management and Budget for review this week, according to filings posted on Thursday.
The submissions were disclosed on the website of the Office of Information and Regulatory Affairs, the division of OMB responsible for reviewing proposed regulations. However, the filings do not include specific details about the content of the proposals or anticipated timelines for their release.
Basel Endgame Rules Face Industry Scrutiny
The regulatory effort has attracted significant attention from the banking sector, which strongly opposed earlier attempts during the Biden administration to implement stricter capital requirements. Those initial proposals would have substantially increased the amount of capital that major banks must hold against potential losses. The Basel endgame rules are designed to adopt international standards that dictate how financial institutions should assess risk and allocate capital accordingly.
Notably, the Federal Reserve did not submit a corresponding proposal to OMB, despite sharing joint responsibility with the other agencies for developing these bank capital rules. Spokespeople for all three regulatory agencies either declined to comment or did not respond to requests for information about the submissions.
Regulatory Timeline and Development
Fed Vice Chair for Supervision Michelle Bowman, who oversees the central bank’s regulatory initiatives, previously indicated that the agencies are working toward proposing new Basel endgame rules by early 2026. This timeline suggests regulators are taking a measured approach following the industry backlash against the previous version.
The filings refer to rules on “Regulatory Capital and Standardized Approach for Risk-weighted Assets,” which represents the technical framework banks use to determine how much capital they must maintain based on the riskiness of their activities. These standardized approaches are central to the Basel III international banking reforms that aim to strengthen financial system stability following the 2008 financial crisis.
Banking Industry Opposition and Revisions
Additionally, the banking industry’s intense lobbying efforts against the original proposal appear to have influenced the regulatory approach. Major financial institutions argued that the Biden-era version would have unnecessarily constrained lending and imposed disproportionate burdens on U.S. banks compared to international competitors.
Meanwhile, the submission of proposals by only two of the three responsible agencies raises questions about coordination among regulators. The absence of a Federal Reserve submission could indicate ongoing internal discussions about specific provisions or timing considerations for the central bank’s portion of the rulemaking process.
In contrast to the previous regulatory approach, the new version may incorporate modifications that address industry concerns while still advancing international capital standards. However, authorities have not confirmed what changes might be included in the revised proposals or how significantly they differ from earlier versions.
The OMB review process typically takes several weeks to months, after which agencies can proceed with formally proposing rules for public comment. Following that public comment period, regulators would need to finalize the rules before implementation, meaning actual changes to bank capital requirements likely remain well over a year away. The ultimate scope and impact of the revised Basel endgame rules will not become clear until regulators release the full proposal text for public review.
