U.S. Bank capital-reform proposal could free up $2.6 trillion in lending capacity

A major analysis indicates that proposed changes to U.S. bank-capital rules could allow large banks to release up to 14% of their common-equity Tier 1 capital – unlock­ing an estimated $2.6 trillion in incremental lending capacity. The reforms would reduce risk-weighting and liquidity constraints, enabling banks to expand credit lines to businesses and households. Proponents see it as a growth boost, but critics warn it could raise systemic risks given non-bank credit growth and AI-driven-asset exposures. The debate is gaining traction among regulators and market participants.