In a move that’s drawing comparisons to pre-2008 deregulation, the Trump administration is reportedly planning to ease capital requirements for large banks. These proposed changes target the Dodd-Frank era regulations that were put in place after the last financial crisis to require banks to hold additional capital reserves to cushion potential losses
For corporate treasurers and financial decision-makers, this isn’t just abstract regulatory news. It’s a signal to closely evaluate where and how your organization holds deposits.
What’s Happening?
According to reporting by The Guardian, the administration’s proposed reforms include reducing the minimum capital banks must hold relative to their assets. This would free up capital for lending and investment, a move that proponents say will create a more vibrant economy and allow for greater growth. Additionally, this action will reduce regulatory burden on banks – including community banks.
However, critics, including some former regulators, have expressed concern that weakening these rules could reintroduce systemic risks to the banking system. But regardless of your view on the politics of this decision, corporate depositors should take note.
Why Capital Requirements Matter to Depositors
Capital requirements are essentially a measure of a bank’s ability to absorb losses. The higher the capital, the more resilient a bank is during downturns. When capital buffers shrink, the risk profile of a bank can increase.
Capital requirements are an especially important consideration for corporate depositors with cash balances above the FDIC insurance limit of $250,000. If your bank fails and your deposits are uninsured, your organization could experience a significant loss or disruption in liquidity. Corporate Treasurers should be taking a few things into consideration when evaluating the safety and soundness of their institution as capital requirements shift and change.
- How strong are my current banking partners?
Assess capital adequacy, risk ratings, and balance sheet strength. Don’t rely solely on brand recognition—look deeper. - Are our deposits fully protected?
Diversify across a network of banks to stay within FDIC insurance limits while still earning competitive returns. - What’s our exposure if one of our banks goes under?
Use a partner with a structured deposit management strategy that mitigates single-bank risk. - Does our banking strategy reflect our corporate values and risk appetite?
A move away from stable capital requirements might not align with your organization’s mission or fiduciary responsibility.
The Ampersand Approach: Safety, Rate, and Alignment
At Ampersand, we help financial leaders navigate shifting banking landscapes with confidence. Our approach ensures our clients maximize deposit safety, achieve ultra-competitive rates, and have an aligned banking partner that shares their corporate values.
Financial regulations will continue to evolve. But what doesn’t change is your organization’s need for secure, values-aligned, and rate-competitive banking solutions. Now is the time to review your deposit strategy, not after a crisis hits.
Have a Question? We’d love to hear from you and work with you to find the right banking partner for your organization.
