Trump Proposal Loosens Recession-Era Bank Regulations

The Trump administration announced new policies to lower the amount of capital banks must hold.

The proposal was introduced Thursday, and it comes in the wake of President Donald Trump’s March executive order on mortgage credit.

Wall Street has longed for lower capital requirements following the 2008 financial crisis that prompted lawmakers to impose restrictions on banks, the Wall Street Journal (WSJ) reported Thursday. Some, mainly Democrats, have supported these restraints, citing potential financial collapses. (RELATED: Kathy Hochul Begs Rich People Who Fled New York For Florida To Return And Foot Bill For ‘Generous Social Programs’)

Democratic Massachusetts Sen. Elizabeth Warren released a statement in Nov. 2025 warning against Trump’s proposal.

“Donald Trump is setting the stage for more Wall Street bailouts and devastating financial crashes,” her press release stated in part. “His banking regulators just gave megabanks the green light to load up on more debt and operate with even thinner financial cushions—putting the entire economy at risk. ”

Many institutions have been subjected to strict capital requirements in case of an economic crash. This created lending opportunities for private-credit firms, according to the WSJ.

Treasury Secretary Scott Bessent praised the proposals on X as building “Parallel Prosperity for Main Street and Wall Street.”

Congratulations to @federalreserve, @USOCC, and @FDICgov, on today’s Basel Capital Proposal.

Today’s outdated capital requirements are needlessly complex and misaligned with their actual objective. Rather than solving for safety and soundness, they are pushing lending out of the…

— Treasury Secretary Scott Bessent (@SecScottBessent) March 19, 2026

(RELATED: US Lost Jobs In February, Showing Weaker Economy Than Expected)

The Biden administration had proposed increases of potentially 20%, and then 9%, at the largest banks, according to the report. These proposals were part of the Basel accords, an international agreement, the WSJ reported.

Banks pushed back against the Biden administration. Some institutions aired ads during the NFL season, urging Americans to consider the potentially harsh economic consequences.

WASHINGTON, DC – FEBRUARY 26: Federal Reserve Board Vice Chair Michelle Bowman testifies before the Senate Banking, Housing and Urban Affairs Committee in the Dirksen Senate Office Building on February 26, 2026 in Washington, DC. The committee held a hearing titled “Update from the Prudential Regulators: Rightsizing Regulation to Promote American Opportunity.” (Photo by Anna Moneymaker/Getty Images)

The Fed voted in favor of the Trump administration’s proposals 6-1 Thursday, the WSJ reported. There is a 60-day comment period before the policies can be finalized.