Barr speech signals Fed to rework capital rules after pressure from industry

Facing intense pressure from the banking industry, the Federal Reserve Board may scale back two controversial rule proposals aimed at reducing risks of bank failures in the event of a market downturn.

Michael Barr, the Fed’s vice chair for supervision, said that he will recommend that two rules–the Basel III endgame proposal and the proposal to adjust the capital surcharge for global systemically important banks (G-SIBs)–be scaled back.

“I intend to recommend that the board re-propose the Basel endgame and G-SIB surcharge rules. This will provide the public the opportunity to fully review a number of key broad and material changes to the original proposals and provide comment,” he said in a speech delivered Tuesday at the Brookings Institution in Washington, D.C.