Bank regulators are preparing to roll back some of the most stringent safeguards imposed on financial institutions in the wake of the Global Financial Crisis, paving the way for a significant recalibration of commercial real estate lending. The changes would mark the largest overhaul of capital rules in more than 15 years, potentially resetting the lending environment for banks while unwinding guardrails designed after 2008 to prevent systemic risk.
The pending revisions target three key areas, beginning with reserve requirements established under the 2023 Basel Endgame framework. Those rules were intended to “substantially increase the capital requirements applicable to large banks and to banks with significant trading activity,” according to a Federal Reserve white paper. The added reserves have long been controversial, with banks resisting measures that tie up capital rather than deploying it in the market.
Fed Vice Chair for Supervision Michelle Bowman signaled in late September that regulators are working toward a more industry-friendly approach. “We have a good perspective on what’s been working and what could be improved,” she said, noting collaboration among the Fed and other domestic agencies on a revised Basel framework expected by early 2026.
“The Basel provisions primarily affect large U.S. banks, applying to those with more than $100 billion in assets,” Gregory Jones, co-founder of Silverbrook Advisors, told GlobeSt.com. “Banks of that size hold about half of all CRE loans.” Any loosening of these standards, he added, could have a direct and substantial impact on commercial real estate financing.
A second major change would lower the amount of capital large global banks must hold against low-risk assets, including U.S. Treasuries. The goal is to strengthen Treasury markets by making them more attractive to banks, encouraging purchases that could reduce yields and lower interest rates across the economy, from real estate loans to the national debt.
“An easing of capital restrictions will absolutely increase lending at these institutions,” Jones said. “Loans can now be extended without the need to raise additional capital to satisfy capital stress tests. This would drive down the cost of those loans and be a huge tailwind for the real estate industry.”
That potential tailwind doesn't come without concerns. Lower reserve requirements could revive riskier lending practices. Jones acknowledged that banks still carry “scars … etched in their balance sheets” from the events of 2008. “Don't expect a return to those lending standards if these provisions are removed,” he said. “You will see an increase in lending, but not the flood of cheap, risky debt that nearly brought down the economy in 2008.”
Still, industry veterans caution that institutional memory fades over time. As several sources have told GlobeSt.com, executive turnover eventually shifts the mindset of leadership. By the time the financial crisis is two decades past, the enduring lesson may rest more in spreadsheets than in lived experience — and that, some observers warn, could prove to be the real test of the next lending cycle.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.