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Federal Reserve to loosen capital requirements for big U.S. banks

The Federal Reserve plans to loosen capital requirements for the largest U.S. banks, a move aimed at encouraging lending and helping lenders compete with private credit firms. In a speech, Fed vice-chair for supervision Michelle Bowman said upcoming reforms to the implementation of global Basel III “Endgame” rules would slightly reduce overall capital requirements for major banks, including JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley. The changes include adjusting how extra capital buffers for systemically important banks are calculated, which would lower surcharges and offset increases tied to Basel reforms. The proposal follows heavy lobbying from the banking industry after earlier plans in 2023 could have raised capital requirements by about 19%. Regulators argue the revisions will better align requirements with actual risk, while critics warn that weakening safeguards could reduce protections put in place after the 2008 financial crisis. Details of the reforms are expected to be released by U.S. regulators next week.

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