US Banks Pitch Fed Capital Rule Tweaks

The United States — Federal Reserve is in the final stages of overhauling U.S. capital rules, with large U.S. banks formally submitting their final proposals for tweaks. The banks are pushing for reductions in capital assigned to Wall Street trading activities, the removal of a requirement to hold capital against unused credit card lines, and further adjustments to the surcharge on globally interconnected banks. The United States — Federal Reserve's relaxed drafts, unveiled in March, are estimated to reduce big banks' loss-absorbing capital by about 4.8%, a significant improvement from an earlier 2023 proposal that suggested a 20% capital hike. Critics, such as Better Markets, argue that trimming capital requirements could make financial firms more vulnerable to risks and potentially harm the United States economy. Banking trade groups, including the Mortgage Bankers Association, Bank Policy Institute, Financial Services Forum, Mortgage Bankers Association, and United States Chamber of Commerce, have filed joint comment letters supporting the changes.