Regulatory shift: The Federal Reserve is considering lowering bank capital requirements from 19% to a minimum of 3%.

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The Federal Reserve has presented a revised proposal to other U.S. regulatory agencies, significantly relaxing capital requirements for Wall Street’s major banks. This marks the latest signal of financial deregulation since Trump took office.

According to media reports citing sources familiar with the matter, some officials estimate the new proposal will reduce the overall capital increase for most major banks to between 3% and 7%. This is far lower than the 19% increase in the 2023 proposal and also below the 9% in last year’s compromise version. Banks with larger trading businesses may see even smaller increases, or possibly decreases.

This move is expected to be welcomed by Wall Street banks, which had previously strongly opposed the original version—known as the “final Basel III rule.” Critics argued that a sharp rise in capital requirements would increase loan costs and weaken U.S. banks’ positions relative to international competitors. Supporters, however, emphasize that this is crucial to financial stability.

Regulators are considering changing how risks are assessed for trading, wealth management, and investment banking businesses—collectively known as market risk. According to earlier media reports, the Federal Reserve plans to release the new proposal as early as the first quarter of 2026. The plan is being led by Vice Chair for Supervision Michelle Bowman, a Trump appointee.

Core Adjustments of the Revised Proposal

According to the framework of the revised proposal, regulators are re-evaluating how market risk is calculated. This adjustment could have a significant impact on banks with large-scale trading operations. Industry organizations had previously written to regulators stating that the original Biden-era proposal would lead to excessive increases in market risk capital requirements and harm diversified trading business models.

Treasury Secretary Bessant previously suggested discarding some elements of the 2023 proposal, which required certain banks to adopt the higher of two different risk-based capital measurement approaches.

The Fed’s documents may also provide guidance for regulators to allow reductions in the capital banks must allocate for fee-based businesses such as wealth management services and certain credit card operations. As part of the revised framework, if medium-sized banks agree to accept other capital restrictions, regulators are also considering giving them an opt-out mechanism.

Positive Signals Already Seen in the Market

Although U.S. officials have not reached a final agreement, sources say regulators have largely agreed on the direction of the measures. Bowman has held discussions with the heads of the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, both of whom must approve the proposal. Representatives of the FDIC, the Federal Reserve, and the OCC all declined to comment.

As regulators relax the tightened supplementary leverage ratio requirements and simplify aspects of the annual stress tests, major banks have shown greater confidence in returning profits to shareholders. Stock buybacks among the six largest U.S. banks in the third quarter rose by about 75%, exceeding $27 billion.

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