Originally published on September 18, 2024, by Aquiles Suarez for NAIOP.
On Sept. 10, in a speech given at the Brookings Institution of Washington, D.C., the Federal Reserve’s Vice Chair for Supervision Michael Barr announced that the central bank would be revising and re-proposing its bank-capital rules proposal commonly referred to as their Basel III Endgame Regulation. The regulation, first proposed in 2023, would have mandated a dramatic hike in the capital requirements on major banks and garnered intense criticism from the private sector, including from NAIOP and its real estate allies, who raised concerns about the negative impact the new regulations would have on the availability of credit for commercial real estate. In a clear victory for NAIOP and real estate, Barr made clear in his speech that the Federal Reserve (Fed) would be scaling back the regulation.
Basel III is a reference to the Basel Accords, an international standardized approach to banking regulation focused on levels of bank capital and other requirements designed to enhance the safety and soundness of global financial institutions. The Basel Committee on Bank Supervision administers the accords, and Basel III, which originated in response to the great financial crisis of 2007-2008, is the third phase of Basel. The “Basel III Endgame Regulation” is the term used to refer to the final regulation of that phase. In July 2023, the Fed, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, jointly proposed the Basel III Endgame regulations for public comment, with the intent of issuing these in final form by mid-year 2024.