US Capital Hikes and Other Wall Street Bank Rules Now Hinge on US Election

23 August 2024

U.S. regulators will not be able to finalize contentious bank capital hikes before the November presidential election, casting doubt over whether those and other stiff draft rules for Wall Street banks will be completed at all, said five people familiar with the matter. The so-called Basel III Endgame rules would overhaul how banks with more than $100 billion in assets manage their capital, potentially crimping their lending and trading. Banks say extra capital is unnecessary and will hurt the economy, and have aggressively lobbied to kill Basel.

The Democratic candidate for president, Vice President Kamala Harris, has called for strengthening bank rules. But if Republican candidate Donald Trump wins, his administration is widely expected to rip up or dramatically weaken the new rules, the sources said. Trump has pledged to cut red tape. The two candidates are locked in a tight race although Harris is leading in some battleground states.

Regulators have been arguing for months over whether to reissue the Basel draft and allow banks to feed back, Reuters reported in June.
Industry executives widely expect the agencies will re-propose the rule after Federal Reserve Chair Jerome Powell told Congress last month it was “essential” to do so given there had been major changes. But it remains unclear how the Fed will persuade the other agencies, which want to finalize the rule before the election, to back that plan, the sources said.

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