The new framework of the Federal Reserve "eases restrictions" on Wall Street, significantly loosening capital requirements for large banks.

According to informed sources, the Federal Reserve has presented a revised plan framework to other US regulatory agencies, which will significantly relax the capital requirements for Wall Street's large banks during the Biden administration. Sources say that after calculations, some officials believe that the terms of this plan by the Federal Reserve will control the overall increase in capital for most large banks between 3% and 7%. Although the framework does not contain specific forecast data, this estimate is much lower than the 19% increase in the 2023 proposal and lower than the 9% increase proposed in last year's compromise version. Some sources point out that for banks with large trading portfolios, the impact of the new requirements may result in smaller increases in capital, and could even lead to decreases. Although the plan is still in the preliminary stages, it is likely to be welcomed by Wall Street banks - which strongly opposed the initial US version of the "Basel III Endgame" proposal. Critics believe that significantly increasing capital requirements may raise lending costs and put US banks at a disadvantage in competition with international counterparts; supporters say it is crucial for financial stability. Earlier reports stated that the Federal Reserve plans to announce this as yet undecided new plan in the first quarter of 2026. Michelle Bowman, who was appointed by former President Donald Trump as Vice Chair for Supervision of the Federal Reserve earlier this year, is currently leading the development of this new measure. Sources say that in the revised framework, regulatory agencies are also considering a proposal: if medium-sized banks agree to comply with other capital limit requirements, they may receive exemptions for the new capital rules. These sources indicate that US officials have not yet reached a final agreement on the plan, but regulatory agencies have largely come to a consensus on the overall direction of the measures. According to sources, Bowman has held consultations with the heads of the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), both of whom must approve the plan. A spokesperson for the OCC did not respond to a request for comment, while representatives of FDIC and the Federal Reserve declined to comment. With regulatory agencies moving to relax the "enhanced supplementary leverage ratio" requirements and loosen parts of the annual stress testing, confidence in large banks returning profits to shareholders has increased. The six largest US banks increased their stock buyback programs by about 75% in the third quarter, totaling over $27 billion. Adjustments related to market risk US Treasury Secretary Scott Benintenza previously suggested not adopting certain aspects of the 2023 proposal, which required some banks to choose the stricter of two different risk-based capital measurement methods to comply. The current plan framework under review has discarded this practice from the Biden administration. Sources say that regulatory agencies are considering adjusting the assessment of "market risk" in the proposal, involving the measurement of risk levels related to trading, wealth management, and investment banking operations (these three categories of business are collectively referred to as "market risk"). This part of the new plan may have a significant impact on banks with large trading operations. Previously, industry organizations expressed in a letter to regulatory agencies that the original proposal during the Biden administration would lead to a significant increase in market risk capital and inhibit a diversified trading business model. The Federal Reserve document may also provide guidance to regulatory agencies on how to reduce the amount of capital banks need to allocate for "fee-based business lines," which include wealth management services and specific credit card operations.