U.S. banking regulators introduced Basel III Endgame (B3E), a proposal for more safety rules to overhaul U.S. capital requirements and ensure the stability of the largest global banks. The proposal has faced significant pushback, with some attempting to ease the requirements and others attempting to prevent the new rules entirely.

What is Basel Endgame?

Basel III is a set of international banking regulations developed by the Basel Committee on Banking Supervision (BCBS) after the 2008 financial crisis to enhance the strength of the banking system. The implementation of these regulations has been spread out over several years. B3E refers to the final implementation and full adoption of these regulations by banks and financial institutions worldwide.


Key components of B3E include capital adequacy (banks maintaining more capital to cover risks), liquidity standards (to ensure banks have enough high-quality liquid assets), leverage ratios (to prevent excessive leverage), risk management (to improve risk measurement, monitoring, and reporting systems), and global adoption (to create consistency with banks in Europe and other regions).

Only banks with more than $100 billion in assets are affected, which is 37 out of the 4,100 banks in the United States. This may seem like a small number, but money in the United States is highly concentrated in the biggest banks.

Overall, B3E aims to create a more resilient banking sector by strengthening capital and liquidity requirements, enhancing risk management practices, and promoting financial stability. Supporters of B3E say the proposed requirements are worth it if they can prevent another financial crisis like the Great Recession of 2008. This framework for global regulatory standards can help create an even playing field among international banks and promote consistency across borders.


Many U.S. banks are lobbying against B3E. Some banks that argue against B3E say the new safety rules are burdensome, complex, and unnecessary. B3E requires banks to invest in new technologies, systems, and processes to meet requirements, leading to increased compliance costs. The complexity of implementing the regulations could divert attention and resources away from other vital banking activities.

Some say the proposal could harm lending, product offerings, and the broader economy. Affected banks would be required to raise equity capital by approximately 16 percent based on various factors. JPMorgan Chase estimates it would have to increase capital by 25 percent. The higher capital requirements might cause banks to hold more capital in reserve, potentially reducing the amount of money available for lending. This could impact economic growth, particularly in credit-dependent sectors.

Banks complained that the Federal Reserve did not do a thorough analysis before proposing B3E. To address this concern, the Federal Reserve requested additional data from banks to further analyze the impact of the proposal.

Regulators suggest that banks are exaggerating the harm B3E will cause, but it’s very possible the new requirements could move lending away from the biggest banks (e.g., JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America) and toward nonbanking financial institutions that are not subject to the same rules (e.g. asset management firms, venture capital firms, finance companies, and private equity firms). For example, this may help large business development companies who make secured loans.

The proposal is just that—a proposed rule, not a final rule. When the final version is approved, it could be softer than the version currently on the table. Once approved, it will take three years for implementation. Only time will tell who is right on this.

In the Classroom

This article can be used to discuss the American financial system and monetary policy (Chapter 15: Money and the Financial System).

Discussion Questions

  1. What is Basel III? What does Endgame refer to?
  2. What is the aim of B3E from a regulatory perspective?
  3. Why do some banks argue against B3E?

This article was developed with the support of Kelsey Reddick for and under the direction of O.C. Ferrell, Linda Ferrell, and Geoff Hirt.


Carleton English and Daren Fonda, "A Bank Safety ‘Endgame’ Is Coming. Who Wins and Loses," Barron's, December 8, 2023, https://www.barrons.com/articles/banks-rules-endgame-jpmorgan-citigroup-wells-fargo-rocket-mortgage-bofa-3227dd86

Natasha White, "Wall Street Says Basel 3 ‘Endgame’ Will Upend Climate Finance," Bloomberg, December 17, 2023, https://www.bloomberg.com/news/articles/2023-12-17/wall-street-says-basel-3-endgame-will-hurt-climate-finance

Pete Schroeder, "US Banking Regulators Extend Feedback Window for Contentious Capital Proposal," Reuters, October 20, 2023, https://www.reuters.com/business/finance/us-banking-regulators-extend-feedback-window-contentious-capital-proposal-2023-10-20/