Federal Reserve Chair Jerome Powell delivered a bombshell revelation to House lawmakers on Wednesday, hinting at seismic shifts in the contentious Basel III endgame proposal aimed at bolstering capital requirements for large banks.
Broad and Material Changes Anticipated
In a testimony before the House Financial Services Committee, Powell acknowledged the widespread and bipartisan condemnation of the proposal, indicating that regulators are likely to heed the clamor for change. The plan, which mandates banks with assets exceeding $100 billion to ramp up capital reserves, faced a barrage of criticism during its public comment phase earlier this year.
While Powell emphasized that no definitive decisions have been made, he underscored the palpable concerns raised by stakeholders. “I do expect that there will be broad and material changes to the proposal,” Powell affirmed, expressing confidence that the final iteration will garner robust support within both the Federal Reserve and the financial landscape at large.
Powell Material Changes Capital Hike Plan : Possibility of a Drastic Reset
In a move that sent shockwaves through the financial sector, Powell revealed that regulators have not ruled out the prospect of a complete overhaul. The notion of a re-proposal, essentially scrapping the existing framework in favor of a revamped draft, looms large. Powell characterized this option as “very plausible,” contingent upon the evolving dynamics surrounding the proposal.
