OCC Tightens Rules to Few Banks: What’s Changing in Capital Standards

In recent months, under Comptroller Jonathan V. Gould, the OCC has moved decisively to recalibrate regulatory burdens so that only the largest and most complex banking organizations—the “megabanks”—are subject to its toughest capital, leverage, and governance standards. By increasing threshold sizes and easing enhanced supplementary leverage requirements, OCC aims to reduce what it views as regulatory overreach that disincentivizes GSIBs from participating in low-risk, low-return but socially important activities like U.S. Treasury market intermediation. [1][2][3][4]

The notice of proposed rulemaking issued December 23, 2025 proposes amending the “Heightened Standards” guidelines so that insured national banks, federal savings associations, and insured federal branches would only be subject if they have average total consolidated assets of at least $700 billion—up from $50 billion. [2] This would exclude many institutions that currently operate under heightened expectations and supervisory scrutiny, shifting risk oversight to focus on institutions whose size and systemic risk justify it. Simultaneously, the final rule on enhanced supplementary leverage ratio (eSLR) standards, adopted jointly by the OCC, FDIC, and Federal Reserve on November 25, 2025, reduces that ratio for depository subsidiaries of GSIBs and refashions it into a buffer standard rather than part of the “well-capitalized” metrics under prompt corrective action. [3]

While the aggregate capital requirement reductions for holding companies are modest—less than 2%—there may be material relief at the local banking (subsidiary) level. However, because much capital regulation is at the consolidated (holding company) level, the scope for using freed regulatory capital for dividends or bonuses is limited in practice unless rules on distributions loosen as well. [3][4]

Strategically, these moves align with historical themes under the Trump and now‐current administration of easing regulatory burden for banks, especially large ones, and re-shifting some supervisory discretion upward. They may improve banks’ profitability, make them more competitive vs. nonbank lenders, and encourage participation in areas like Treasury market making. But risks include potential undercapitalization under stress, public and political backlash over perceived weakening of oversight, and uncertainty during the transition period about how “heightened standards” and buffer metrics will be enforced and calibrated. The threshold jump from $50B to $700B is large, potentially leaving a new gray area for institutions between those figures. Regulatory arbitrage may emerge, and systemic risk oversight might become coarser as smaller failures may no longer trigger heightened scrutiny until they escalate.

Open questions include: how many banks will lose “covered bank” status under the new threshold; how methodological changes (such as defining ‘highly complex’ operations) will affect in/out classification; whether released capital will lead to increased risk‐taking; how supervisory resources will be reallocated; and whether parallel rules (at state or international levels) will respond or pull in the opposite direction. Also uncertain is how the market, rating agencies, and counterparties will perceive rolling back well capitalization metrics, and if this will impact borrowing costs or investor risk assessments.