Regulatory Developments
The Federal Reserve has taken several regulatory and policy actions since the publication of the December 2025 Supervision and Regulation Report. Key actions are detailed in table 1. All Supervision and Regulation (SR) and Consumer Affairs (CA) letters are available on the Federal Reserve Board's public website.9
Table 1. Federal Reserve or interagency rulemakings (proposed and final), statements, and other regulatory developments
| From 11/26/2025 – 5/19/2026 | |
|---|---|
| Date issued | Development |
| 12/15/2025 | Agencies announce dollar thresholds for smaller loan exemption from appraisal requirements for higher-priced mortgage loans. Press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20251215b.htm |
| 12/17/2025 | Federal Reserve Board withdraws 2023 policy statement and issues new policy statement regarding the treatment of certain Board-supervised banks that facilitates responsible innovation. Press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20251217a.htm |
| 12/18/2025 | Federal Reserve Board publishes first of several staff manuals for the supervision of the largest and most complex banks. Press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20251218a.htm |
| 1/12/2026 | Agencies issue 2025 Shared National Credit Program report. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20260112a.htm |
| 2/4/2026 | Federal Reserve Board finalizes hypothetical scenarios for its annual stress test and votes to maintain the current stress test-related capital requirements until public feedback can be considered. Press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20260204a.htm |
| 2/23/2026 | Following earlier actions to remove reputation risk from its supervision of banks, Federal Reserve Board requests comment on proposal to codify that removal. Press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20260223a.htm |
| 3/5/2026 | Agencies clarify the capital treatment of tokenized securities. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20260305a.htm |
| 3/19/2026 | Agencies request comment on proposals to modernize the regulatory capital framework and maintain the strength of the banking system. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20260319a.htm |
| 4/23/2026 | Agencies finalize changes to enhance community bank leverage ratio. Joint press release: https://www.federalreserve.gov/newsevents/pressreleases/bcreg20260423a.htm |
| 5/19/2026 | Agencies request comment on financial institutions rating system. Joint press release: https://www.ffiec.gov/news/press-releases/2026/pr-05-19 |
Basel III, U.S. Standardized Approach, and GSIB Surcharge
On March 19, 2026, the federal banking agencies requested comment on three proposals to modernize the regulatory capital requirements and better align regulatory capital with risk while maintaining the safety and soundness of the banking system. Comments on all three proposals are due June 18, 2026.
The first proposal applies primarily to the largest, most internationally active banks. It enhances risk sensitivity, reduces burden, improves consistency across banks, and finalizes Basel III implementation. These banks would use a single calculation method for risk-based capital requirements, replacing the current dual stack approach.
The second proposal applies to all but the largest banks and better aligns capital requirements with lending risk while preserving simplicity. Specifically, it reduces disincentives for mortgage lending by modifying capital requirements for servicing and originating mortgages. The mortgage servicing modifications also apply to banks using the community bank leverage ratio (CBLR) framework. The proposal also requires certain large banks to reflect unrealized gains and losses on certain securities in their regulatory capital levels after a period of time for transition.
The third proposal, from the Federal Reserve Board, improves how systemic risk is measured in the framework for determining the additional capital requirement for the largest and most complex banks, referred to as the GSIB surcharge.
Section 9(13) Statement on Permissible Activities for State Member Banks
On December 17, 2025, the Federal Reserve Board withdrew a 2023 policy statement and issued a new policy statement regarding the treatment of certain Board-supervised banks. In 2023, the Board issued a policy statement that limited Board-supervised state member banks to the same activities permissible for banks supervised by the other federal bank regulatory agencies. That statement included a discussion of how the policy would apply to certain innovative products and services. Since the policy statement was published, the financial system and the Board's understanding of innovative products and services have evolved. As a result, the 2023 policy statement is no longer appropriate and has been withdrawn. The new policy statement creates an avenue for both insured and uninsured Board-supervised state member banks to engage in certain innovative activities consistent with safety and soundness.
Economic Growth and Regulatory Paperwork Reduction Act of 1996
The Economic Growth and Regulatory Paperwork Reduction Act of 1996 requires the FFIEC and federal banking agencies to review regulations every 10 years to identify outdated or otherwise unnecessary regulatory requirements for their supervised institutions. The federal banking agencies divided their regulations into 12 categories and are soliciting comments.
On March 26, 2026, the Federal Reserve Board held an outreach meeting in Washington, D.C. as part of its regulatory review. This meeting invited stakeholders to present views on the regulatory categories listed in any of the four Federal Register notices applicable to Board supervised institutions. These included applications and reporting; power and activities; international operations; consumer protection; directors, officers, and employees; money laundering; rules of procedure; safety and soundness; securities; banking operations; capital; and the Community Reinvestment Act.
Removal of Reputation Risk
On February 23, 2026, the Federal Reserve Board requested comment on a proposal to codify the removal of reputation risk from its supervision of banks. The proposal reiterates the Board's policy against Board personnel requiring or encouraging a Board-regulated institution to de-bank or refuse to provide banking services to a customer based on the customer's constitutionally protected beliefs, speech or conduct or on engaging in a politically unpopular but legal business activity. In June 2025, the Board announced that reputation risk would no longer be a component of examination programs in its supervision of banks. This proposal would build on that announcement to help ensure supervisory decisions are based on material financial risks as well as increase clarity and facilitate greater precision in supervisory decisionmaking. It would also support the Board's focus on core financial risk in its supervision of banks.
Recalibration of the Community Bank Leverage Ratio
On April 23, 2026, the federal banking agencies finalized a rule to modify the CBLR consistent with statutory authority. This change provides community banks with greater flexibility to use a simpler measure of capital adequacy and reduce regulatory burden. The final rule takes into account the unique business models and risk profiles of community banks.
The rule will lower the CBLR from 9 percent to 8 percent, which will provide more flexibility for community banks to opt into the framework. The final rule also extends the grace period from two quarters to four quarters for a community bank that temporarily falls out of compliance. The framework continues to simplify regulatory capital requirements for community banks by allowing them to adopt a relatively simple leverage ratio to measure capital adequacy, rather than reporting risk-based capital ratios.
Community banks that opt into the framework will be subject to a capital requirement that continues to promote safety and soundness. Under the framework, banks must maintain a leverage ratio that is significantly higher than the leverage ratio standard otherwise applicable to community banks. The change will take effect July 1, 2026.
Revisions to the CAMELS Rating Framework
In May 2026, the FFIEC invited public comment on proposed revisions to the Uniform Financial Institutions Rating System, commonly known as CAMELS, which would focus ratings on material financial risk and improve the transparency and consistency of ratings.
The CAMELS rating framework evaluates the safety and soundness of financial institutions, evaluating an institution's capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk. An institution is assigned a rating for each component and a composite rating.
The proposal better aligns ratings and a financial institution's safety and soundness by focusing ratings on material financial risks. This proposal would retain the basic framework of the existing rating system, with targeted modifications to the composite and component rating definitions and evaluation factors.
References
9. The Federal Reserve publishes SR and CA letters to address significant policy and procedural matters related to the Federal Reserve System's safety-and-soundness and consumer compliance supervisory responsibilities, respectively. SR letters are available on the Board's public website at https://www.federalreserve.gov/supervisionreg/srletters/srletters.htm, and CA letters are available on the Board's public website at https://www.federalreserve.gov/supervisionreg/caletters/caletters.htm. Return to text