The Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) on 19 March 2025 jointly unveiled a substantially revised capital requirements proposal designed to implement the final leg of Basel III international standards within the United States, proposing that the nation's globally systemically important banks (G-SIBs) hold 1.4% more in Common Equity Tier 1 (CET1) capital under the updated endgame framework. The proposal is subject to a 90-day public consultation period.
The revised proposal represents a considerable softening from earlier iterations of the Basel III endgame rules that drew sustained criticism from the banking industry and several members of Congress, who argued that the original approach imposed capital burdens that were disproportionate to the risks being managed and would undermine the competitiveness of US banks relative to their international peers. The recalibration by regulators reflects the deliberations that followed that industry pushback and signals a material shift in how the agencies intend to balance systemic resilience against the economics of bank lending.
G-SIBS COULD HOLD LESS CAPITAL OVERALL
Although the endgame proposal itself would require G-SIBs to hold 1.4% more CET1 capital on a standalone basis, the aggregate picture changes markedly when the companion proposals on the G-SIB surcharge and stress testing methodology are taken into account. When those revisions are combined with the endgame rule, the net effect for G-SIBs would be a reduction of 4.8% in total capital requirements relative to current levels — a materially different outcome from the gross increase implied by the endgame component in isolation.
The G-SIB surcharge — a supplementary capital buffer applied exclusively to the largest and most interconnected financial institutions — has long been a focal point in debates about whether US capital requirements are calibrated appropriately relative to international peers. The companion revisions indicate that regulators are prepared to adjust the surcharge in a way that substantially offsets the new endgame requirements, delivering net capital relief to the institutions most vocal in expressing concern about the cumulative weight of layered regulatory obligations on their ability to deploy capital productively.
For smaller banks, the revised proposal carries different and arguably more significant implications. Institutions below the G-SIB threshold would see their CET1 requirements decline by 7.8% under the complete package, reflecting a regulatory acknowledgement that the original endgame framework had extended capital requirements to mid-sized institutions in ways that may not have been proportionate to the risks those banks actually pose to financial stability. The differentiation between treatment of G-SIBs and smaller institutions represents one of the more consequential aspects of the revised approach.
90-DAY CONSULTATION AND NEXT STEPS
The joint proposal will now proceed through a formal 90-day public comment window during which banks, trade associations, consumer advocacy organisations, and other interested parties will have the opportunity to submit written responses. The three agencies will review those submissions before finalising the rules, a process that typically spans several additional months and can result in further calibration adjustments before a final rule is published and assigned an effective date.
The Basel III endgame project has been among the most closely watched regulatory undertakings in US banking since the post-financial-crisis reform era, given its potential to reshape the capital economics of large bank business models and influence lending capacity and market-making activity across fixed income, derivatives, and equity markets. The revised proposal's more measured approach has been interpreted by market participants as a signal that the agencies are attentive to the competitive concerns raised by banks and are seeking a framework that satisfies international commitments without imposing requirements that exceed what Basel III actually mandates.