Fed official outlines Basel III, stress-test transparency and SLR changes for large banks

Unidentified Speaker, Vice Chair for Supervision at the Federal Reserve System, said the Fed is modernizing capital regulations for large banks and coordinating with the FDIC and OCC on several measures intended to reduce uncertainty and preserve market liquidity.

The speaker described work revising the "four pillars" of the capital framework: stress testing, the supplemental leverage ratio (SLR), Basel III implementation, and the GSIB surcharge. On stress testing, the speaker said the Fed's proposal increases transparency by disclosing stress-test models and scenario design and that the agency published final 2026 stress-test scenarios earlier in the month. The speaker said the goal is to "reduce volatility, balance model robustness with transparency, and ensure that significant future changes receive public input."

On the SLR, the speaker said that, together with the OCC and FDIC, the agencies finalized changes for U.S. global systemically important banks to ensure leverage requirements serve as a backstop to risk-based requirements and to avoid the ratio preventing low-risk activities such as holding Treasury securities.

The speaker said Basel III implementation is being advanced jointly with the FDIC and OCC to finalize capital standards and reduce regulatory uncertainty. The GSIB surcharge framework is also being refined "to balance safety and soundness with economic growth," the speaker said, so banks can continue supporting businesses and consumers.

No legislative actions or votes were announced during the remarks; the speaker framed these as ongoing rulemaking and interagency work.