“Endgame” for Main Street Lending

In July 2023, the Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC; or collectively, the Agencies) published a notice of proposed rulemaking (the Proposal) that would substantially revise the capital requirements applicable to large banks. The Proposal is consistent with the global trend of financial regulators prioritizing financial stability and risk mitigation by imposing stricter capital adequacy standards. But depending on the Proposal’s foreseeable consequences, the Agencies may get neither financial stability nor economic growth. It is essential to evaluate the Proposal’s foreseeable consequences—particularly for downstream stakeholders—which may arise from such regulatory measures. The purpose of this white paper is to comprehensively evaluate the implications and unintended consequences for main street businesses that will result from the Agencies’ Basel III Endgame Proposal.