Federal Reserve said to face resistance from FDIC on reworked bank capital plan

At least three of the Federal Deposit Insurance Corp.’s five directors oppose the Federal Reserve’s revised proposal for the amount of capital banks will be required to hold to weather a severe downturn, according to a media report published on Friday.

Democrat Rohit Chopra, who’s on the FDIC board and is also director of the Consumer Finance Protection Bureau, joined two Republican board members, FDIC Vice Chair Travis Hill and Jonathan McKernan, in opposing the proposal, Bloomberg reported, citing people familiar with the discussions. Last week, Federal Reserve Vice Chair for Supervision Michael Barr unveiled a reworked plan that would increase capital requirements for the largest banks by 9%, down from the 19% originally proposed.

Three regulators are responsible for the so-called Basel III endgame rules — the Fed, the FDIC, and the Office of the Comptroller of the Currency. On Wednesday, Fed Chair Jerome Powell said the three agencies are “moving together” with the aim to wrap up the process in the first half of 2025.

Chopra has privately said the revision was too much of a giveaway to Wall Street banks, Bloomberg said. McKernan, meanwhile, wants a full re-proposal rather than a partial one.

Banks that would be affected by the Basel III endgame rules include JPMorgan Chase (NYSE:JPM), Bank of America (NYSE:BAC), Citigroup (NYSE:C), Wells Fargo (NYSE:WFC), Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS), U.S. Bancorp (NYSE:USB), PNC Financial (NYSE:PNC), Bank of New York Mellon (NYSE:BK), State Street (NYSE:STT), and Capital One Financial (NYSE:COF).

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