BPInsights: March 21, 2026

Banking Agencies Issue Basel Proposal

The federal banking agencies on Thursday unveiled a revamped proposal on Basel III Endgame capital requirements. The package, revised from the 2023 iteration, aims to make requirements more risk-sensitive and account for the cumulative effect of the overall capital framework, including overlaps in capital requirements and stress testing. Comments on the proposal are due in 90 days. The Federal Reserve on Thursday also issued a proposal with the banking agencies on the standardized approach for risk-based capital requirements and a standalone, Fed-only proposal on the GSIB surcharge for the largest banks.

• What's New. The Basel proposal would simplify the framework by subjecting firms to a single set of risk-based capital calculations; better align minimum requirements with risk, including by considering additional credit risk factors; ensuring operational risk requirements appropriately reflect business activities, including investment management and custody services; and better measuring market risk, properly accounting for diversification and facilitating firms' use of robust internal models, according to a Fed memo. It would also consider overlaps with the stress capital buffer requirement, particularly for operational risk and trading activities. The proposal would also remove the capital deduction for certain mortgage servicing assets, part of its goal of incentivizing banks to engage in mortgage origination and servicing.
• By the Numbers. The aggregate common equity tier 1 capital requirements of Category I and II banks would decrease by 2.4 percent under the proposals (a 1.4 percent increase due to the Basel III proposal and a 3.8 percent decrease due to the GSIB surcharge proposal), according to the Fed. The cumulative impact of all proposals on risk-based capital requirements - including proposed stress testing changes - would lower the common equity tier 1 capital requirements of Category I and II banks by 4.8 percent.
• Joint Trades Statement. BPI, the Financial Services Forum, American Bankers Association, Consumer Bankers Association and National Bankers Association issued a joint statement on Thursday in response to the release of the proposal, pictured above.

Five Key Things

1. To See the Full Picture of Banking Competition, Look Closely at Fintechs' Market Presence

To what extent have banks been losing ground to fintechs and other less regulated nonbanks in the markets for consumer financial services over the last decade? A new BPI working paper - summarized in a blog post this week - explores this question.

Why It Matters.

• Bank merger analysis is generally framed around competition among banks, measured by bank deposit concentration, even though nonbanks increasingly compete with banks in several consumer product categories.
• Consumer financial protection regulation emphasizes outcomes for more financially fragile consumers, and shifts from bank to less closely supervised nonbank providers can be consequential for this group.

New Research. A BPI working paper investigates market share trends between 2013 and 2022 in the markets for personal loans, credit cards, and personal lines of credit, as well as market share trends for checking accounts, mutual funds and brokerage accounts. The paper also examines whether substitution away from banks has been most associated with consumers who exhibit indicators of financial vulnerability or have more limited financial resources.

2. BPI's Clara Kim Testifies at House Hearing on Privacy

BPI Senior Vice President Clara Kim testified on Tuesday at a House Financial Services Committee hearing on the financial privacy framework. Other witnesses at the hearing were Nathan Taylor of Morrison Foerster, Steve Boms of FDATA, Jordan Crenshaw of the U.S. Chamber of Commerce and Laura MacCleery of UnidosUS. Much of the discussion focused on potential changes to the Gramm-Leach-Bliley Act, which established a comprehensive framework for U.S. financial privacy. Here are a few highlights.

• Preemption versus State Authority and Patchwork Burdens. Republicans and industry witnesses argued GLBA should move from a federal floor to a fully preemptive national standard, emphasizing that patchwork state regimes create consumer confusion, duplicative costs and reduced competition and innovation. Chairman French Hill (R-AR) argued national uniformity would "lower barriers to entry created by the current state patchwork." Clara Kim warned that state data-level exemptions can create "dual compliance regimes," resulting in overlapping notices, separate compliance structures, and costs that "trickle down to the customers." Democratic lawmakers argued preemption is only defensible if the federal standard is stronger.
• With a "Scalpel, Not a Sledgehammer." Chairman Hill and other lawmakers described the GLBA as a durable, tech-neutral framework that should be modernized with "a scalpel, not a sledgehammer." They praised the law as having survived and adapted for 25 years precisely because it is activity and principles-based, arguing Congress should preserve that flexibility rather than hardwire prescriptive mandates. Rep. Frank Lucas (R-OK) suggested that rules could be subject to "regulatory whiplash" if they are changed by regulatory agencies rather than codified in statute. Kim described GLBA as a "simple but effective framework" whose "technology-agnostic and principles-based approach" has allowed banks and regulators to adapt "without constantly rewriting the statute."
• 1033. Several Democratic lawmakers raised concerns about consumers' ability to move their data from one platform to another, the subject of the Section 1033 data sharing rule. Kim stated that "access to customer data held at a bank should be governed by the GLBA to avoid inconsistency and unintended consequences, and [we] support existing GLBA-like protections for customer data when it leaves the bank and enters the data aggregation ecosystem."
• Opt-Out, Opt-In. Witnesses and lawmakers discussed how to expand consumer data access rights without disrupting the legitimate and legally required ways that banks use data, such as compliance with AML requirements and fraud prevention. The current "notice and opt out" model "gives choice and is simplistic, gives consumers control of where their information goes, plus the added benefit of all the effective points underlying GLBA," Kim said.

3. Google, Meta, Major Tech and Retail Firms Sign Anti-Scam Accord

Google, Meta, Amazon and eight other tech and retail companies signed a pledge to help fight scams on their platforms. The agreement - the Industry Accord Against Online Scams and Fraud - was signed this week ahead of the UN Global Fraud Summit in Austria. The companies agreed, among other things, to increase information sharing with industry peers and law enforcement about transnational criminal networks and share best practices for detecting and preventing scams as well as deploy new defensive tools - including AI systems.

• Accountability. Still, as noted in Axios reporting, there are no penalties if the companies fail to meet these goals. Data sharing is part of the scam solution, but BPI has also called for social media and telecom companies to be held accountable with enforceable obligations to prevent scams spreading on their platforms.
• Broader Context. Fraud and scams have become an urgent priority in the U.S. as scam networks, often originating from overseas, victimize consumers through texts, calls and fake social media ads. A Reuters investigation found that 10 percent of Meta's projected revenue in 2024 came from scam ads, and social media platforms often lack incentives to remove ads quickly. Congress recently introduced legislation to crack down on scam ads.

4. 10th Circ. Denies Custodia Master Account Case Rehearing

The U.S. Court of Appeals for the Tenth Circuit late last week denied a full court rehearing of an earlier decision that backed Federal Reserve banks' discretion to reject master account applications. The case centered on Custodia, a Wyoming crypto Special Purpose Depository Institution that had sought and been denied a master account. The Tenth Circuit was split 7-3 in the denial of the rehearing request, with a dissenting judge arguing that the decision would give the Fed too much power over state banks. The Custodia case is a pivotal precedent in legal debates over the Fed's authority to grant or deny access to its payment rails, a topic that has reemerged as Kraken recently obtained a "limited-purpose" master account from the Kansas City Fed. The Kraken approval separately raises questions about the Federal Reserve's process for ensuring transparency and consistency in master account approvals across the Reserve Banks.

5. The Crypto Ledger

Here's what's new in crypto.

• Market Structure Timing. Key senators telegraphed the timing of the crypto market structure bill's advancement at a Digital Chamber event this week. Sen. Cynthia Lummis (R-WY), chair of the Senate Banking Committee's digital assets subcommittee, said she expects a markup in April. On the issue of yield, Sen. Bernie Moreno (R-OH) said at the same event that Sens. Thom Tillis (R-NC) and Angela Alsobrooks (D-MD) are in "the final stages of negotiation" with the White House and the crypto and banking industries.
• Stablecoin Fragmentation. A recent paper from Hyun Song Shin of the BIS explains that stablecoins fail to achieve the "singleness" required to act as money instruments, because they are not interoperable across different blockchains. Gaps between different chains can be bridged, but at significant costs, resulting in stablecoins "from the same issuer existing in multiple non-fungible forms across different blockchains, fragmenting liquidity and undercutting the network effects that should be the strength of a widely adopted payment instrument."
• FDIC's Hill Floats Potential Bank Blockchain Guidelines. FDIC Chairman Travis Hill suggested that there could be future regulatory guidance on banks' engagement with public blockchains. "The goal would be something that has durability over time," Hill said at the DC Blockchain Summit this week. The agency could eventually propose rules outlining how banks can safely engage with permissionless systems, where counterparties are harder to verify, he said. "We do continue to think about what potential risks there could be that are involved, privacy considerations, [know your customer] considerations, things like that." He also noted that the reversal of 2022 FDIC crypto guidance corrected an overly stringent stance.
• Crypto Platform BlockFills Files for Bankruptcy. Crypto trading platform BlockFills filed recently for bankruptcy protection in Delaware court with up to $500 million in debt. The firm had paused crypto withdrawals after a selloff in crypto markets. BlockFills affiliate Reliz Technology Group Holdings Inc. listed $100 million to $500 million in debt against $50 million to $100 million in assets in a petition filed last Sunday. The bankruptcy announcement follows a recent lawsuit from creditor Dominion Capital, which has alleged that BlockFills misappropriated and commingled customer crypto assets, concealed losses and refused to return funds after suspending withdrawals.
• Atkins Previews SEC Crypto Proposal. SEC Chairman Paul Atkins previewed a forthcoming interpretive measure to provide more clarity on which crypto assets are securities and therefore subject to U.S. securities law. The SEC will establish four asset categories that are not deemed securities: digital commodities, digital collectibles, digital tools and payment stablecoins under the GENIUS Act. "With these categories in place, the interpretation then clarifies that only one crypto asset class remains subject to the securities laws: digital securities, namely traditional securities that are tokenized," Atkins said in remarks this week at a conference. "This distinction returns the Commission to its core mission-and statutory authority-of protecting investors involved in securities transactions. We are not the Securities and Everything Commission, anymore." The SEC issued joint guidance with the CFTC on the same topic on Tuesday. 

In Case You Missed It

Traversing the Pond

Here's what's new in international banking policy.

• EU to Delay Impact of FRTB. The European Commission will adopt legislation after Easter to neutralize the short-term impact of the Fundamental Review of the Trading Book market risk capital requirement, according to the Financial Times. The Commission will introduce "a temporary multiplier that negates the increase for banks' trading activities for up to three years," according to the article. The plan aims to offset any competitive disadvantages from decreased U.S. capital requirements.
• ECB Publishes Latest Supervisory Banking Statistics. The European Central Bank published statistics on the large banks it supervises for the fourth quarter of 2025. The covered banks' aggregate Common Equity Tier 1 ratio stood at 16.18% in fourth quarter of 2025, compared with 16.10% in previous quarter and 15.97% one year ago. More details can be seen here.
• BIS Releases Quarterly Review. The Bank for International Settlements this week released its quarterly review, which highlighted market developments in light of geopolitics and a weakening dollar, compressed credit spreads in the U.S. and Europe, artificial intelligence impacts and potential risk blind spots in linkages between banks and nonbank financial institutions.
• Rey Appointed to Key Economic Position at BIS. Hélène Rey, Professor of Economics at London Business School, has been appointed as Economic Adviser and Head of the Monetary and Economic Department of the BIS. Rey is appointed for a five-year term, effective September 2026. She will lead the economics work of the Bank and join its Executive Committee. Additionally this week, Ben Gully was appointed as Secretary General of the Basel Committee on Banking Supervision. Gully is currently the Deputy Superintendent at OSFI in Canada, where he manages the Supervision Sector.

What to Watch Next Week

• The House Financial Services Committee holds a hearing on Wednesday, March 25, titled "Tokenization and the Future of Securities: Modernizing Our Capital Markets."
• The Financial Stability Oversight Council holds a meeting on Wednesday, March 25.
• The House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee holds a hearing on Thursday, March 26, titled "Innovation at the Speed of Markets: How Regulators Keep Pace with Technology."

BPI Job Bank

• AVP, Graphic Designer

Member News

Fifth Third Launches Small Towns & Small Cities Initiative to Advance Community & Economic Development

Fifth Third on Thursday announced that Lima, Ohio, has been selected as the first community in the Bank's new Small Towns & Small Cities initiative, a community and economic development program designed to support communities with a history of disinvestment. The four-year commitment will bring Fifth Third's capital, expertise and partnerships to advance Lima's locally led priorities in housing and homeownership, small business, workforce development and infrastructure. Fifth Third's Small Towns & Small Cities initiative builds on the momentum of the Fifth Third Neighborhood Program, which since 2021 has invested nearly $410 million in urban communities across the U.S. and helped catalyze an additional $200 million from partners.

Upcoming Events

• 3/25/2026: The House Financial Services Committee Holds a Hearing on "Tokenization and the Future of Securities: Modernizing Our Capital Markets."
• 3/25/2026: FSOC Meeting
• 3/26/2026: House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee Holds a Hearing Titled "Innovation at the Speed of Markets: How Regulators Keep Pace with Technology."
• 3/26/2026-3/27/2026: Brookings Papers on Economic Activity Spring 2026 Conference