The Federal Reserve Board published a speech by Governor Michael S. Barr in which he argued that recent and proposed deregulatory steps by the Federal Reserve and other agencies are weakening bank safeguards and increasing financial stability risk. Speaking in a personal capacity, Barr said the combined rollback of capital requirements, supervisory intensity, prospective liquidity standards and consumer protection amounts to the most significant deregulation of the banking system since the Global Financial Crisis. Barr said changes already adopted or proposed would reduce required capital for the eight global systemically important banks by 6 percent, or about USD 60 billion, even though those firms hold around 60 percent of banking sector assets. He pointed to less demanding stress tests, a weaker leverage ratio backstop, a U.S. Basel III proposal that falls short of the international standard, and a lower GSIB surcharge, alongside changes to the rating framework for the 36 largest financial institutions, fewer matters requiring attention, and lower staffing and horizontal reviews. He also warned that easing liquidity requirements would raise the likelihood or severity of bank runs, said cutbacks at the Consumer Financial Protection Bureau have reduced consumer protections, and argued that banks' more than USD 2.6 trillion of credit commitments to other financial entities in the second half of 2025 strengthen the case for keeping bank capital and liquidity robust.
Federal Reserve Board2026-06-06
Federal Reserve Board publishes Barr speech warning bank deregulation could cut largest bank capital by USD 60 billion and increase stability risks
The Federal Reserve Board published a speech by Governor Michael S. Barr warning that recent and proposed deregulatory steps by the Federal Reserve and other agencies are weakening bank safeguards and increasing financial stability risk, amounting to the most significant banking deregulation since the Global Financial Crisis. Speaking in a personal capacity, he said the measures would cut required capital for the eight global systemically important banks by 6 percent (about USD 60 billion), cited weaker stress tests, leverage and liquidity standards, lower GSIB surcharges, and argued that large bank credit commitments to other financial entities underscore the need to maintain robust capital and liquidity.