FedFin Forecast: Prudential Regulatory Framework Set for Structural Change Largely Built on Current Standards

As promised, FedFin begins our 2022 forecasts with this in-depth report on bank regulation.  In general, we conclude that the context of decisions in 2022 and beyond will shift from a focus on tailoring efficiencies and burden relief to one emphasizing risk mitigation, fairness, equity, and — for the very biggest banks — a smaller systemic footprint.  This report looks at the impact of pending personnel decisions as well as the outlook for climate-risk, new capital rules, FBO standards, and other key issues.  The only rule we think might get a near-term substantive rewrite is the stress capital buffer (see FSM Report CAPITAL225) via tougher CCAR standards and a reversal of the prior decision to end qualitative objections.  The odds of a leverage rewrite are smaller, but not negligible.