An initiative of the Bank Policy Institute

The federal government’s Basel Endgame proposal will have real costs for everyday Americans. These capital requirements will create a drag on our economy for years to come — and will hurt working families and small businesses.

What is Basel Endgame?

The recently unveiled proposal from the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency aims to require financial institutions to hold significantly higher capital, as much as 16–19% more, depending on the size of the institution. This would limit banks’ capacity to offer things like mortgages, car loans, credit cards and small-business loans.

This proposal will have
real consequences for
everyday Americans.

For many, the dream of owning a home will become more elusive, as the proposal drastically increases the capital charge for home mortgages with lower down payments, putting homeownership further out of reach for many buyers.

Small businesses will struggle because the proposal will make it harder to obtain financing, meet payroll and support their local communities.

Regulators claim this is necessary to protect the stability of the financial system, but it will have real consequences for families and small businesses across the country.

"If these standards are adopted, they will have a devastating impact on our efforts to increase Black homeownership and disadvantage all first-time, and, in particular, first-generation homebuyers who do not have the benefit of multi-generational wealth or higher-than-average incomes."
Economic Contributions of Banks Affected by this Proposal:
(Banks Affected by this Proposal refers to Bank Holding Companies with greater than $100 billion in assets at the end of 2022)
in loans to households for things like auto loans and credit cards
in commercial and industrial loans
in municipal loans and securities
in agricultural loans
How does requiring higher bank capital affect lending?

When capital requirements are set excessively high, it makes it much harder to secure a loan or credit — this is especially true for working families and small businesses.

Will it make the economy more stable?


Instead of increasing stability, this will increase risk by creating market instability outside of regulators’ reach and pushing consumers to unregulated, more expensive financial services products. Private equity and hedge funds are exempt from the Basel requirements, and they will reap the benefits of diverted banking demand, driving higher consumer costs and greater market instability.

The capital requirements set by the Federal Reserve will have a dramatic effect on the U.S. economy. Studies show that every percentage point increase in capital requirements slashes about $42 billion of domestic output per year.


The banking agencies should engage in a robust and thorough economic analysis of the proposal’s effects. Federal agencies need to go back to the drawing board and ensure that future policy allows millions of low-income Americans and small businesses to thrive.

Congress must stand up to the banking agencies
AND stop Basel Endgame
before it's too late.