Former New York Fed president Bill Dudley argues that US regulators must strengthen bank resolution frameworks before easing capital requirements. He warns that current policies risk future taxpayer bailouts by prioritizing deregulation over effective failure management.
In March 2026, regulators proposed net reductions in capital requirements for large banks. Meanwhile, the FDIC proposed in June 2026 to raise the asset threshold for mandatory resolution plans from $50 billion to $100 billion, while reducing documentation requirements.
The collapse of Silicon Valley Bank, which held roughly $209 billion in assets, resulted in nearly $20 billion in FDIC losses. These costs were covered through assessments on other banks rather than by the failed institution's investors.
Dudley notes that the UK links capital buffer reductions of approximately 5 percentage points to the existence of credible resolution regimes. He suggests that such an approach is only viable if the resolution framework is proven to be effective.
