Fed unveils modernization principles for bank supervision
U.S. banks of all sizes will be subject to new risk-based capital rules and supervisory operating principles as the Fed finalizes its 2026 Basel III proposal.
Vice Chair for Supervision Bowman said the Financial Stability Board's Standing Committee on Supervisory and Regulatory Cooperation is issuing four principles to guide regulatory and supervisory modernization and that the Federal Reserve will apply them to U.S. banks.
The Fed's 2026 Basel III proposal, published for comment in March, would move large banks to a single stack of risk-based capital requirements, recalibrate the global systemically important bank surcharge and index that surcharge to nominal economic growth. The comment period has now closed and the agency is reviewing feedback before finalizing the rules.
In parallel, the Fed released its Supervisory Operating Principles, the first public disclosure of the framework that guides its examinations. The principles emphasize early detection of material risks and greater transparency, and the agency is also working to index fixed asset thresholds - such as the $10 billion benchmark - to inflation and economic growth.
The agency also issued a consultation report on sound AI practices for financial institutions, inviting public comment through July 22. The guidance is intended to be flexible, allowing banks to adopt AI responsibly without prescriptive mandates.
A broader report containing the modernization principles will be opened for public comment in the fall and subsequently presented to the G20, marking the next milestone in the international effort to align supervision with evolving risks and innovation.