Major financial institutions across the country are preparing one final attempt to convince federal regulators to reduce banking capital requirements before the November election, according to four industry sources with knowledge of the discussions.
In March, the Federal Reserve released revised versions of comprehensive capital regulations that officials estimate would decrease the money large banks must set aside for potential losses by approximately 4.8%. Regulators defended the changes by stating current requirements are damaging the economy.
Although the banking sector views this as a win compared to the Fed’s initial 2023 proposal that would have increased capital requirements by 20%, the advantages won’t be distributed equally. Several major banks believe they’re being disadvantaged relative to their competitors, sources indicated.
JPMorgan Chase, America’s biggest bank, announced last month that it anticipates its capital requirements will actually rise, while rival institutions will see theirs decrease.
Before next month’s comment deadline, JPMorgan along with other major institutions including Wells Fargo, Citigroup, and Bank of America, plus their industry associations, are preparing a final list of requested modifications.
A primary concern, according to sources, involves a requirement in the “Basel” proposal to maintain capital against 10% of unused credit lines called “unconditionally cancelable commitments,” most commonly unused credit card limits. These credit lines currently require no capital reserves since banks can withdraw them anytime, but regulators contend that realistically, lenders might avoid doing so during economic downturns due to customer relationships or risk management considerations.
Banks would receive some capital relief on utilized credit lines also proposed in March. However, major banks plan to argue the new requirement could compel them to lower credit card limits and eliminate unused lines, sources said. Regional and smaller banks won’t be impacted since they’ll operate under a proposed simplified capital system, two sources noted.
“The rational thing to do is cut credit limits closer to approximate usage,” said Matthew Bisanz, a partner at Mayer Brown who is monitoring the proposal closely. He described the amount of affected unused credit as “enormous.”
Representatives for the Fed, JPMorgan, Wells Fargo, Citi and Bank of America either declined comment or didn’t respond to inquiries. Sources requested anonymity because regulatory discussions are confidential.
Federal Deposit Insurance Corporation data shows nearly $5 trillion in unused credit card lines existed at the end of 2025, though Reuters couldn’t immediately determine how much might be affected by the proposal.
The Basel Committee, the international organization that establishes capital standards, initially proposed the new requirement, which was later incorporated into the 2023 plan created by Democratic officials at the Fed and other bank regulators under former President Biden.
After successfully lobbying to postpone and weaken that draft, banks anticipated President Trump’s Republican regulators would reduce or eliminate the requirement and were dismayed to discover it remained when they examined the details, three sources said.
Another significant dispute involves a capital penalty the Fed placed on globally systemically important or “GSIB” U.S. banks after the 2008 financial crisis. These institutions have long contended the Fed should update the data it uses to calculate the “GSIB surcharge,” established in 2015, to account for economic growth and more accurately represent banks’ size relative to the global economy.
The Fed proposed last month a one-time adjustment for recent economic growth and automatic updates for future growth, but banks will again advocate for returning to 2015 calculations, a change that could substantially reduce their surcharges, two sources said. JPMorgan Chase CEO Jamie Dimon described parts of the surcharge as “nonsensical” last month, claiming it penalized the bank for its achievements.
Additional bank requests will likely address trading book asset treatment and how the rules interact with annual bank stress tests, analysts predicted.
“A lot of banks have said, look, we think that this is a very good starting point… but there are things in the proposal that they would like to see changed,” said Richard Ramsden, who oversees financial research coverage at Goldman Sachs.
“At this stage, given just how long this debate has gone on for, it makes sense to just focus on getting this done.”
Banks are eager to complete the rules before November’s mid-term elections potentially give more influence to Democrats who are skeptical of what some have characterized as a Wall Street handout, three sources said, leaving lenders only months to secure favorable modifications.
Fed Vice Chair for Supervision Michelle Bowman, who is spearheading the initiative, has stated she wants to complete the proposal by year’s end. She has also informed banks she doesn’t expect them to repeat the aggressive strategies they employed against the 2023 plan, and to focus their responses, Reuters reported.
Recognizing they may not have such sympathetic regulators for a decade or longer, the industry still plans to seek maximum relief possible, two sources said.
“It’s an unbelievably complicated proposal,” Greg Baer, CEO of the Bank Policy Institute, which spearheaded the industry opposition initially, told Congress last month. “I don’t even want to know how long our comment letter is going to be.”
