Federal banking regulators are preparing to ease capital requirements for banks, marking a significant shift from post-2008 financial crisis regulations. The Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency will jointly propose changes to the Basel III framework as early as next week.

Fed Vice Chair for Supervision Michelle W. Bowman outlined the planned changes, which would eliminate duplicative capital calculation requirements and adjust rules related to trading activities and mortgage lending. The changes follow intense lobbying by banks and trade groups who argued that current requirements constrain lending to businesses and households.

The proposed modifications would result in a modest decrease in capital requirements for the largest banks while providing regional banks with greater flexibility. While supporters say the changes will cut red tape and unlock capital for investment, critics including Senator Elizabeth Warren warn the adjustments could leave the economy vulnerable to another crisis.