In remarks by Treasury Secretary Scott Bessent ahead of the Federal Reserve Capital Conference, the U.S. Department of the Treasury set out an intent for Treasury to drive a strategic, whole-of-government direction for financial regulatory policy and to convene interagency consultations to support deeper reforms beyond recent incremental measures. The approach emphasises assessing the growth impact of proposed rules, centring regulation on Main Street and community banks, opposing debanking based on political or religious views, supporting innovation, aligning illicit finance policy with national security priorities, and pushing back on international standard setting viewed as inconsistent with US interests. The remarks highlighted actions already underway by bank regulators, including proposed recalibration of leverage capital requirements, ending the use of “reputation risk”, a proposal to rescind a 60,000-word Community Reinvestment Act rule, work to refocus supervision on material financial risks, an interagency process on Bank Secrecy Act and countering the financing of terrorism reforms, and efforts to modernise the regulatory capital framework. On capital reform, Bessent argued that outdated requirements can be misaligned with risk and that excessive capital can reduce lending and shift activity to nonbank intermediaries, and he urged simplification, including abandoning the July 2023 proposal’s structure that would have imposed both modernised and legacy capital requirements with the higher binding. He also pointed to the need for community banks to benefit from any reductions in requirements on exposures such as mortgage lending, suggesting an opt-in option for banks not otherwise subject to the modernised regime. Treasury indicated it will use interagency consultations to define the strategic policy direction and is looking for a forthcoming capital proposal that addresses deficiencies and simplifies the framework.
U.S. Department of the Treasury 2025-07-21
U.S. Department of the Treasury calls for an interagency reset of financial regulation and urges regulators to drop the dual capital requirement approach
Treasury Secretary Scott Bessent outlined a strategic, whole-of-government approach for U.S. financial regulatory policy, emphasizing reforms beyond incremental measures, focusing on Main Street and community banks, and opposing debanking based on political or religious views. Key actions include recalibrating leverage capital requirements, modernizing the regulatory capital framework, and aligning illicit finance policy with national security priorities. Treasury plans interagency consultations to define strategic policy direction and address deficiencies in the capital framework.