How Wall Street won 'capitulation' from the U.S. Federal Reserve on new bank rules

financialpost.com:

Just months after the shocking unravelling of Silicon Valley Bank and First Republic Bank last year, Michael Barr unveiled a new set of guardrails for the U.S.’s biggest lenders and an uncompromising defence of why they were needed.

“Some industry representatives claim that inadequate capital had nothing to do with those bank failures,” the United States Federal Reserve‘s vice-chair for supervision said in July 2023, one year into his tenure as Wall Street‘s top regulator. “I disagree.”

Fourteen months later, Barr has walked back the landmark proposal that sought to apply more stringent rules on major U.S. lenders such as JPMorgan Chase Co. and Goldman Sachs Group Inc., after one of the fiercest opposition campaigns from the banking lobby and a bipartisan group of U.S. lawmakers.

“Life gives you ample opportunity to learn and relearn the lesson of humility,” he said on Tuesday.

U.S. regulators are not the only ones having to embrace humility when it comes to implementing the so-called Basel III Endgame, the final rules tied to an international effort that emerged in the wake of the 2008 financial crisis to shore up the banking sector.

Globally, there is a retreat among the financial system’s top cops, who have pared back proposals in response to fervent pushback from the very institutions they oversee. The United Kingdom this week is set to join the U.S. and European Union in making concessions and delaying the eventual implementation of their own rules.

The scope and scale of the reversal from regulators speak to the intensity of the industry opposition, which at its peak included threatened lawsuits and billboards by bank lobbyists warning that “everyday Americans” would suffer if the rules were adopted. That the