Trump-era OCC eyes lighter capital rules to boost lending

Bloomberg News

WASHINGTON — Acting Comptroller of the Currency Rodney Hood confirmed that the Trump administration plans to revise capital requirements for banks, aiming to ease what he described as excessive regulations that could constrain credit. 

The remarks, delivered to a crowd at the U.S. Chamber of Commerce's Capital Markets Forum, signaled a deregulatory shift focused on loosening constraints in any new rules while preserving financial stability.

"Regulations must be effective, not excessive," Hood said at the forum on Tuesday. "As we continue interagency deliberations, I will remain committed to a capital framework that supports resilience but does not constrain growth.

He pointed to a recent meeting of the Basel Committee on Banking Supervision in Switzerland, established in 1974 to strengthen international banking oversight. Hood said there was general agreement among international counterparts that U.S. capital proposals released under the Biden administration had gone too far.

"I conveyed that sentiment directly," he said. "I was heartened to see consensus from the international community that the U.S. proposal had gone beyond what was necessary."

Hood's comments come as the Trump administration has expressed a more skeptical view of international standard-setting organizations than prior administrations. Treasury Secretary Scott Bessent told lawmakers in April that the U.S. should not "outsource" financial regulation to global bodies like Basel, evoking President Donald Trump's "America First" sensibility.

Regulation and compliance

New Trump faces at FDIC, Fed create regulatory uncertainty for bankers

May 13, 2025 2:30 PM

Hood's speech is broadly in line with the Trump administration's efforts to "right-size" oversight and reduce what regulators see as friction in the banking system — especially for smaller institutions seeking to grow.

Hood said the OCC is working to modernize capital standards and reviewing the supplementary leverage ratio — a simple capital standard that represents the ratio of total assets to total liabilities — to ensure it serves as a capital backstop rather than a binding constraint on banks. While he emphasized that U.S. banks remain the "gold standard" globally, he rejected the idea of "gold-plating" capital rules — adding more stringent layers than international norms explicitly require.

Some Trump appointees have expressed a desire to roll back the SLR, including proposals to exempt U.S. Treasury securities from the enhanced SLR calculation for the largest banks. 

Supporters of the idea argue that the move would reduce strain on Treasury markets and allow banks to engage more fully in government debt trading without hitting capital constraints. But critics warn the change could inflate bank balance sheets with low-risk assets, weaken hard-fought reforms from Dodd Frank Act after the financial crisis and enable a kind of "shadow" monetary policy, whereby the Treasury could stimulate the economy outside the Fed's control if it chose to coerce large banks to buy Treasuries.