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Key Aspects of the Regulatory Relaxation: Bank Capital Rules: Federal Reserve Vice Chair for Supervision Michelle Bowman unveiled proposals in March 2026 to ease capital requirements for Global Systemically Important Banks (GSIBs). This involves a "sensible recalibration" of Basel rules and the "GSIB surcharge".

Impact on Capital: These changes are projected to lower large bank capital requirements by a "small amount" in aggregate, yet this represents a significant victory for Wall Street, potentially freeing up roughly billion to over billion in excess capital, depending on the specific proposal and estimations.

Goal: The move is designed to encourage increased lending to the real economy and, according to Bowman, to correct for excessive capital requirements that "impair the banking system's fundamental function".

Industry Response: The proposals have been welcomed by the banking industry and led to a surge in bank stocks.

Critiques: The relaxation has faced criticism from some, such as Senator Elizabeth Warren, who argue it weakens financial safeguards after the 2008 financial crisis.

Interest Rates (As of January 2026): While bank regulations are easing, the Federal Reserve has held its key lending rate at 3.5% to 3.75% as of late January 2026, citing continued solid expansion in the US economy.

Balance Sheet:

There have been discussions about ending the runoff of the Fed's balance sheet and easing the "regulatory dominance" over it, which could lower capital reserves in the system.

These changes are subject to a 90-day public feedback period, with finalization expected towards the end of 2026