Federal banking regulators on Thursday unveiled a revised Basel III "endgame" proposal that would reduce capital requirements for large banks by an estimated 2.4%, marking a notable shift from earlier, more stringent plans.
The proposal aims to modernize risk weightings and better align capital rules with current economic conditions, a move that drew measured support from both credit union and community bank advocates.
Scott Simpson, president/CEO of America's Credit Unions, said in a prepared statement the changes reflect "a recognition that outdated capital rules can constrain lending and limit access to affordable financial services." He urged the NCUA to follow suit by updating its own capital framework, particularly around mortgage servicing assets and residential lending.
"Credit unions are a critical source of mortgage credit, particularly for low- and moderate-income borrowers," Simpson said, warning that misaligned capital requirements could limit lending and community investment.
Meanwhile, Independent Community Bankers of America President/CEO Rebeca Romero Rainey welcomed regulators' willingness to revisit the rules.
"We are reviewing today's proposals to ensure they help community banks thrive and continue to provide access to capital for small businesses and families," she said in a prepared statement.
Regulators said the proposal is intended to balance financial stability with lending capacity, particularly as economic conditions evolve.
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