Agencies Request Comment on Proposals to Modernize the Regulatory Capital Framework And Maintain the Strength of the Banking System

Summary

The FDIC, Federal Reserve, and OCC jointly proposed three rule changes to modernize the regulatory capital framework for U.S. banks of all sizes, implementing final Basel III components and streamlining compliance calculations while maintaining post-financial-crisis capital strength.

Market Impact

The three proposals would modestly reduce capital requirements for large banks and moderately reduce them for smaller banks, but aggregate banking system capital would remain substantially higher than pre-financial-crisis levels. The comment deadline of June 18, 2026 opens a 90-day public input period before rulemaking proceeds.

Why It Matters

These are the first comprehensive capital framework reform proposals since Basel III was finalized, affecting risk-based capital calculations for every bank in the U.S. banking system.

Key Points

• Proposal one streamlines compliance for the largest internationally active banks by replacing dual calculation sets with a single approach and implements remaining Basel III credit, market, and operational risk improvements.
• Proposal two reduces mortgage-lending disincentives for most banks by modifying capital requirements for servicing and origination, and requires certain large institutions to recognize unrealized securities gains and losses in regulatory capital.
• Proposal three from the Federal Reserve refines systemic-risk measurement for the largest complex banks, affecting the capital surcharge calculation for globally systemically important institutions.
• Despite an anticipated modest overall decline in system-wide capital, the agencies state that levels would remain substantially higher than before the 2008 financial crisis.
• Public comments on all three proposals are due by June 18, 2026; the Federal Reserve is also publishing aggregated data underlying the proposals to improve transparency.

Key Entities

Evidence

The first proposal, which would primarily apply to the largest, most internationally active banks, would improve the capital framework by enhancing risk sensitivity, reducing burden, and improving consistency across b...

Supports: Proposal one covers largest banks and implements final Basel III components

While the agencies anticipate that the amount of overall capital in the banking system would modestly decrease as a result of these proposals, capital levels would still be substantially higher than they were before t...

Supports: Net capital impact: modest decrease but remains above pre-crisis levels

Consistent with the first proposal, the second proposal would reduce disincentives for mortgage lending by modifying capital requirements for servicing and originating mortgages.

Supports: Proposal two reduces mortgage lending capital disincentives for community and regional banks