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As President Donald Trump’s regulators revamp bank rules, big lenders expect their capital requirements could fall, in a stunning victory for the industry which faced a big hike under former President Joe Biden, according to senior industry executives. Aiming to cut red tape that Trump’s agency picks say is hurting the U.S. economy, they are working on the most sweeping overhaul of U.S. capital rules since the global financial crisis of 2008. In addition to narrowing the “Basel Endgame” capital hikes which sparked unprecedented pushback from Wall Street banks, the Fed plans to reduce a capital surcharge levied on risky global banks, shrink a key leverage constraint, and overhaul annual tests that gauge whether lenders can withstand an economic shock. The country’s largest lenders, which have lobbied hard for the long-sought review, are optimistic that the changes combined will result in their capital levels remaining flat or falling, said six industry and regulatory sources, including three top bankers. That expected outcome, reported here for the first time, marks a dramatic turnaround for the industry which faced a 19% hike in 2023 under the draft Basel capital rules which proposed changes to how big banks gauge lending and trading risks. While the Fed last September said that hike would be halved, the plan was never finalized and died with Trump’s election. Big banks have long complained that capital rules are excessive and poorly calibrated, and that some of that cash could better serve the economy through lending. They also argue that they weathered the COVID-19 economic shock just fine. Critics say efforts to chip away at the capital regime are dangerous, and could leave the industry vulnerable at a time when the outlook for the U.S. economy is growing cloudy. With big banks including JPMorgan Chase, Bank of America and Citigroup together holding around $1 trillion in capital, even a small dip could free up billions of dollars for lending, trading, dividends and share buybacks. “You’re going to see here the most aggressive streamlining or easing of bank regulations that we’ve seen certainly since Dodd-Frank and probably sometime before that,” said Ian Katz, managing director at Capital Alpha Partners, referring to the landmark 2010 post-crisis law that overhauled bank rules. A spokesperson for the Fed’s new regulatory chief, Michelle Bowman, who is leading the overhaul, declined to comment. Bowman said last week that she wants the rules to “work well together” and did not necessarily expect capital to fall. Regulators will unveil a new Basel draft by early 2026, she added. The Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation, which are also working on the Basel draft, also declined to comment. “America’s largest banks are the strongest in the world,” said Amanda Eversole, CEO of the Financial Services Forum which represents the country’s eight biggest banks. “Modernizing capital rules will let them put that strength to work – fueling growth for consumers, small businesses, and the economy.” ‘EXTREMELY CONSEQUENTIAL’ The sources, who declined to be identified discussing confidential regulatory issues, said they expect the new Basel draft to be broadly “capital-neutral” at a minimum. That means it would neither increase nor decrease system-wide capital, but change how it is distributed. Trump’s pick for FDIC chair, Travis Hill, in January said “roughly” capital-neutral would be a “prudent starting point.” To get there, regulators are expected to abandon a “dual stack” that would have required banks to comply with the stricter of two methods for measuring their risk capital which penalized banks with large trading businesses, and to ease a requirement to put capital aside for operational risks, like cyberattacks or lawsuits, two of the people said. Capital reductions could then come as the Fed updates the “GSIB” surcharge to better account for economic growth, and as regulators tailor the enhanced supplementary leverage ratio, a risk-blind capital safety net, to each individual bank, three of the sources said. After the industry sued the Fed in December, the central bank is also working to make its stress tests, which partly determine big lenders’ capital buffers, more transparent, likely helping them to optimize their results. Two of the sources cautioned, however, that the regulatory discussions are ongoing and that Democrats on the Fed board may oppose changes that are too favorable to the industry. Based on an analysis of industry materials, Washington-based group Better Markets, which advocates for tougher financial rules, estimates that banking system capital could fall by $200 billion if the industry secures all the relief it has been pushing for. “It’s huge and extremely consequential,” said Phillip Basil, director of economic growth and financial stability at Better Markets. “Its going to take a lot less to bring down a big bank.” Additional reporting by Saeed Azhar Lananh Nguyen, Nupur Anand, Pete Schroeder and Tatiana Bautzer, Reuters
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E-Commerce
Despite being under a year old and having no revenue, Fermi America had a very successful initial public offering (IPO) this week. The company, which aims to provide data and power centers for artificial intelligence, saw its shares (Nasdaq: FRMI) close at $32.53 on their first day of trading Wednesday, up nearly 55% from their IPO price of $21 per share. Fermis stock price continued to rise through after-hours and into premarket trading on Thursday, reaching $36. It reached a high of $39 per share overnight, before dropping closer to $37 ahead of the market opening. What is Fermi? The company was cofounded by Rick Perry, former Texas governor, a GOP presidential contender in 2012 and 2016, and U.S. Secretary of Energy for part of President Trumps first term. His cofounder, Toby Neugebauer, is a former co-managing partner at Quantum Energy. Since its founding in January 2025yes, nine months agoFermi has done very little show and much more tell. Its working on something called Project Matador, a multi-gigawatt energy and data center development campus that would be the worlds largest HyperGrid. In its final form, the center would exist as the Advanced Energy and Intelligence Campus at Texas Tech University. According to Fermi, it would be the only site with the potential to include safe, clean, new nuclear power, the nations biggest combined-cycle natural gas project, utility grid power, solar power, and battery energy storage at unprecedented scale. Fermi aims to deliver up to 11 gigawatts of power to AI data centers by 2038, with 1.1 gigawatts online at the end of 2026. With that said, all Fermi currently has is a lease for 5,236 acres of land from Texas Tech University and a dream. It needs funding to start any construction on Project Matador, some of which could come from its successful IPO. So why has Fermi had such a prosperous IPO, despite being little more than a newborn idea? One theory is that investors see an uncertain startup as a lower cost to entry for investing in the AI boom, which is expected to require enormous power and data in the years ahead. The share prices for big AI players like Meta Platforms and Oracle Corp were $717.34 and $289.01, respectively, at close on Wednesday. Thats a lot less accessible than $20 or $30, which can still make someone feel included in the buzz.
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It’s not just Hollywood that’s been grappling with how to deal with AI-generated characters. Wikipedia editors are figuring all this out as they go along, too. Following reports this week that an AI “actress” named Tilly Norwood is attracting interest from talent agents and rattling real-life performers who make their living in movies and on TV, Wikipedia editors moved quickly to create a page for the characterand almost immediately began arguing over how to describe it. Is it a synthetic actress? Is it even a she? Can Tilly Norwood, despite having 45,000 followers on Instagram, be accurately described as doing anything? These are the types of questions that have been plaguing the dutiful volunteers who are tasked with editing the world’s largest crowd-sourced encyclopedia. While few would argue that the AI character doesn’t meet Wikipedia’s notability guidelines, no one seems quite sure what exactly to say about it. “I’m not comfortable with asserting that Tilly Norwood exists, actually,” one editor wrote on Tuesday, the day the page was created. “I’m also not comfortable with the article using gendered pronouns for the Tilly construct.” Do AI actresses dream of electric Oscars? The discussions this week among Wikipedia editorswhich are visible via the website’s “talk” pagesoffer a fascinating window into the semantic debates that our society is facing more broadly at a time when we’re sharing more and more of our screen time with AI-generated objects designed to look and act like us. An early revision of Tilly Norwood’s page described the character as an “artificial intelligence-generated actress” who “starred” in an AI-generated sketch comedy show. The current version of the page has toned down the anthropomorphic language, although the gendered pronouns remain intact: “Tilly Norwood is an artificial intelligence-generated character marketed as an actress.” A review of talk pages reveals that editors debated passionately about whether to refer to Tilly Norwood as an actress at all, with some arguing that Wikipedia’s language should merely reflect common usage. “‘Actress’ is how the vast majority of reliable sources describe her,” one person wrote. ‘Trained on the work of professional performers’ Tilly Norwood is the brainchild of Xicoia, an AI talent studio launched by Dutch comedian and producer Eline van der Velden. The studio is a division of production company Particle6. The character, whose social media feed includes a mix of AI-generated modeling shots, selfies, and epic movie scenes, made a splash recently at the Zurich Film Festival and has since sparked industry backlash. SAG-AFTRA, the union that represents screen actors, issued a blistering statement, calling Tilly Norwood a “computer program that was trained on the work of countless professional performerswithout permission or compensation.” A report last year from consulting firm CVL Economics found that more than 203,000 entertainment-related jobs in the United States could be disrupted by generative AI technologies by 2026. Fortunately, where Wikipedia is concerned at least, this is not entirely new territory. After all, the site has hosted a page for Mickey Mouse since 2001. For the record, Mickey is described as a he.
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