US to propose Basel rule revisions this month, Bloomberg reports

(Reuters) -The U.S. Federal Reserve and other regulators are set to unveil sweeping changes to a raft of proposed banks capital rules as soon as Sept. 19, Bloomberg News reported on Friday, citing people familiar with the matter.

The revisions could run up to 450 pages and would include key changes to rules that center on operational risk provisions including a reduction in the capital that banks must allocate against business lines like wealth-management services and certain credit-card operations, the report added.

The new revised proposal would also reduce the market-risk requirement for the country’s biggest lenders, which would not face as stringent requirements around mortgages or tax-equity exposures, the report said.

Next Tuesday, Fed vice chair Michael Barr will preview the regulators’ revised proposal and explain the next steps at the Hutchins Center on Fiscal & Monetary Policy, Brookings said in a blog post.

Regulators began rolling out the Basel III rules after the 2007-2009 global financial crisis forced taxpayers to bail out several undercapitalized banks.

In July 2023, the Fed, the Office of Comptroller of the Currency, and the Federal Deposit Insurance Corporation published for comment proposed changes to bank capital rules. The rules are expected to overhaul how larger banks gauge risk and how much capital they should hold.

Banks, which fiercely opposed the original “Basel III Endgame” proposal that would hike capital requirements for larger banks, have been calling for a re-proposal.

Regulators have been working for months on revising the plan in a way that could significantly curtail the capital impact for larger firms.

The Fed declined to comment on the report. FDIC and the Office of the Comptroller of the Currency didn’t immediately respond to Reuters requests for comment.