Why Big US Banks Are Resisting Bigger ‘Capital Cushions’

US regulators proposed new rules last summer requiring banks to add billions of dollars to their so-called capital cushions, which offer protection during downturns. The heaviest burdens would fall on the biggest banks, which would have to boost their capital levels by about 19%. The rules stem from the 2008 financial crisis and came out soon after the 2023 collapse of four midsize banks.

Industry groups have waged a fierce lobbying campaign against the plan, arguing that it would make them less competitive — and make home and business loans less affordable. They delivered reams of feedback during a comment period that ended in January, and in March, Federal Reserve Chair Jerome Powell told lawmakers that he expected the rules to change significantly and that they might even be scrapped.