Wall Street's largest banks are making a last-ditch effort to influence U.S. regulators to further ease capital requirements before the November midterm elections. Key industry trade groups, including the Bank Policy Institute and the Financial Services Forum, are pressing the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (FDIC) on specific changes. They aim to recalibrate the surcharge applied to globally systemic banks to account for nominal economic growth and seek lighter capital charges on undrawn credit card and corporate credit lines within the Basel III endgame package. This initiative follows the release of a redrafted package on March 19, which, according to agency staff, would cut aggregate Tier 1 capital at the eight largest U.S. firms by 4.8%. The industry believes further reductions are possible and necessary.
Regulators and the industry are working towards a finalization timeline that precedes the November 2026 U.S. midterm elections, seeing this period as the optimal window to conclude a rule-making cycle that has spanned two administrations. Federal Reserve Vice Chair for Supervision Michelle Bowman, who is leading this effort, has expressed a desire to eliminate duplicative charges and prevent banking activities from moving outside the regulated system. Bowman, however, has also urged the industry to avoid aggressive public lobbying tactics seen in past Basel negotiations. The current redrafted package is already significantly lighter than its predecessor, with an enhanced supplementary leverage ratio reform effective from April 1, 2026.
This reform, finalized by the FDIC and Federal Reserve in November 2025, replaces a flat 2% eSLR buffer for G-SIB holding companies with a buffer equal to half of each firm’s Method 1 G-SIB surcharge, capped at 1% for subsidiary banks. FDIC staff estimated this change alone would reduce aggregate Tier 1 capital requirements by $13 billion, or just under 2%, at the G-SIB holding-company level, and by $219 billion, or 28%, at the major bank-subsidiary level. Combined with the March 19 Basel rewrite, lobbyists view the cumulative reduction as already meaningful, but they are pushing for additional credit-line and surcharge tweaks to achieve double-digit billion relief at the parent level.
One central issue for banks is a proposal under the Basel framework to effectively hold capital against 10% of unused credit lines, known as “unconditionally cancelable commitments,” primarily unused credit card lines. Previously, these were capital-free as banks could cancel them at any time. Regulators now argue that lenders might not do so during economic stress due to client relationships. The Fed also proposed an adjustment for recent economic growth and future automatic updates for G-SIB surcharges, but banks want the adjustment to go back to 2015 for even greater reductions. JPMorgan Chase CEO Jamie Dimon has called aspects of the surcharge “nonsensical.” Banks are keen to finalize rules before the midterm elections, as a shift in political power could bring more skeptical Democrats to power, potentially hindering further relief efforts.
