Risk-based capital

Europe's top finance ministers are questioning the U.S.'s commitment to the global capital standards. The mistrust could have consequences for international regulatory efforts.

Consumer Financial Protection Bureau Director Rohit Chopra's decision to withhold support of a reworked Basel III endgame capital proposal is logical as a way to gain leverage in this and future rule negotiations but may ultimately not amount to much.

Consumer Financial Protection Bureau Director Rohit Chopra joins the Federal Deposit Insurance Corp.'s two Republican board members in opposing a revamped Basel III endgame proposal, leaving the future of the nascent plan uncertain.

The Federal Reserve chair said he supports the revised proposal outlined by Vice Chair for Supervision Michael Barr and said the new proposal would get a vote by the full Board of Governors early next year.

A plan reportedly being floated by the Federal Reserve would reduce the top-line capital raise for the biggest banks by as little as 5% — down from 16% in the original proposal from last July.

In congressional testimony, the Federal Reserve chair said the Board of Governors is processing the comments on its capital reform proposal. Putting forth an entirely new proposal is "very plausible."

Large and regional banks are taking different approaches to buybacks in light of the proposed new capital rules. Some plan to buy back stock at moderate levels this year, while others say they will to remain on the sidelines until there is more clarity about the reforms.

Banking regulators' push for higher capital for the largest banks may very well pass in some form, but before it does, there needs to be an articulated plan for tackling the migration of banking activities out of the banking system.

Federal Reserve Gov. Michelle Bowman, a vocal opponent to the proposed risk capital rules for large banks, said she still sees a path forward for capital reform.

In official comments on bank regulators' Basel III endgame capital proposal, concerns are being raised by a wide array of stakeholders — including civil rights advocates and consumer advocacy groups — suggesting major amendments or re-proposal may be necessary for the rule to cross the finish line.