Banks Push Fed for Lighter Capital Rules

Major US banks have formally requested further amendments to draft capital regulations from the Federal Reserve. These lenders are pushing for a reduction in the capital they are required to hold against potential losses as US capital standards undergo a significant rewrite.

Primary demands from the banking industry focus on lowering capital charges for trading operations and eliminating the requirement to hold capital against unused credit card facilities. Adjustments are also sought to mitigate the impact of a surcharge on globally systemic banks.

In March, US regulators released looser draft versions of these comprehensive capital rules, stating the changes would decrease large banks' loss-absorbing capital by approximately 4.8%. The industry's trade associations jointly commented that the eight largest global banks could see a roughly $22 billion reduction in capital under the proposed Basel amendments.

Industry representatives expressed concerns that changes to key definitions within credit risk rules might misalign the framework with actual risk levels. They warned that finalizing revised definitions could introduce uncertainty into the capital framework, even as regulators suggest the overall calibration is appropriate.