The Federal Deposit Insurance Corp. (FDIC) is considering actions banking industry professionals frequently describe as “right-sizing” the regulatory framework applied to financial institutions.
During the 2025 American Bankers Association (ABA) Summit in Washington, D.C., FDIC acting director French Hill discussed the potential for easing capital standards for the largest and most complex institutions, as well as the impact volatile market conditions may have on the banking sector.
In prepared remarks, Hill told a general session audience the FDIC is considering waiving some capital requirements mandated by Title II of the Dodd-Frank Act. Commonly referred to as “living wills,” Title II requires banks to develop plans to wind down their operations in an orderly manner in the event of failure.
Hill emphasized that all potential changes are in the preliminary discussion phase while speaking with ABA President and CEO Rob Nichols for a one-on-one chat during the session – the audio of which the trade organization made available as a podcast.
Nichols asked Hill whether banks should be concerned about the volatility in the financial marketplace related to recent tariff activity. Hill said, based on financial institutions’ strong capital and liquidity positions entering the year, he believes they are “well-positioned” to support the economy through these turbulent conditions.
“That being said, it’s our job to be attuned to the downside risks, so we will continue to monitor conditions [and] continue to follow to the extent there’s volatility [impacting] the banking sector,” Hill added.
Among Hill’s top priorities as interim leader of the FDIC are new bank formation, resolution, readiness, innovation, digital assets, and improving the bank merger and acquisition framework. He insisted the top focus of the agency is always ensuring the safety and soundness of the financial system.
Hill noted his past criticism of the Basel III Endgame proposal for capital requirements and noted there are discussions taking place about the appropriateness of current leverage ratio requirements as applied to banks of varying sizes and complexity levels.
“It went well beyond what was in the international agreements,” he asserted. “I think if that had gone into effect, it would have had a number of negative consequences from higher costs to consumers, increased migration out of the out of the banking sector, putting our banks at a competitive disadvantage internationally. So, I think it was a very positive development that that did not go forward.”
In September last year, the FDIC had what Hill described as a “big improvement” over the 2023 Basel III Endgame proposal, though it still contained “a number of issues.” Though it was never published, he said it “got lot of attention within the agencies.”
“I think maybe the biggest issue was with respect to market risk, where there were relatively small changes compared to some of the other components,” he explained. “And I think either there needs to be a rethinking of the global market shock, or more significant changes to the market risk piece of the proposal. But again, at this point, in terms of the interagency conversations, this is all somewhat preliminary.”