Bessent calls for deeper US bank regulatory reforms, scrapping dual capital requirements

David Lawder and Andrea Shalal

Tue, Jul 22, 2025, 12:53 AM 2 min read

By David Lawder and Andrea Shalal

WASHINGTON (Reuters) -U.S. Treasury Secretary Scott Bessent connected Monday called for deeper reforms of what helium called an antiquated fiscal regulatory strategy and said regulators should see scrapping a "flawed," Biden-era connection for a dual superior request operation for banks.

Speaking astatine the commencement of a Federal Reserve regulatory conference, Bessent said excessive capitalization requirements were imposing unnecessary burdens connected fiscal institutions, reducing lending, hurting maturation and distorting markets by driving lending to the non-bank sector.

"We request deeper reforms rooted successful a semipermanent blueprint for innovation, fiscal stability, and resilient growth," Bessent said successful prepared remarks.

The Trump medication is pursuing a wide betterment docket aimed astatine cutting rules governing fiscal institutions, including superior requirements, arguing that specified actions volition boost economical maturation and unleash innovation.

Bessent said regulators person for excessively agelong pursued a "reactionary approach" that has weakened competitiveness and led to byzantine regulations.

The Treasury chief, who earlier connected Monday called connected the Fed to reappraisal its operations to safeguard its monetary argumentation independence, said the Treasury would instrumentality a stronger relation successful driving betterment efforts by regulators, including the Fed.

"To that end, the section volition interruption done argumentation inertia, settee turf battles, thrust consensus, and motivate enactment to guarantee nary azygous regulator holds up reform," Bessent said of the Treasury.

REDUCING CAPITAL REQUIREMENTS

Banking regulators should see abandoning the dual operation projected successful July 2023, but ne'er enacted, that would person seen banks comply with the higher of 2 antithetic methods of measuring their hazard superior requirements.

The proposal, which came aft the high-profile nonaccomplishment of Silicon Valley Bank and different institutions successful 2023, would person importantly accrued the magnitude of superior banks needed to acceptable speech for imaginable losses. It drew aggravated absorption from the industry.

"This dual-requirement operation did not deduce from a principled calibration methodology. It was motivated simply to reverse-engineer higher and higher superior aggregates," Bessent said. "It besides was astatine likelihood with superior betterment arsenic a modernization task due to the fact that it would person preserved the antiquated superior requirements arsenic the binding level for many, possibly most, ample banks."

Bessent besides called for regulatory superior alleviation not conscionable for ample banks but besides astatine the smaller, assemblage slope level. One solution, helium said, would beryllium to let immoderate slope not taxable to modernized superior requirements a prime to opt in.