The Trump administration wants to ease regulatory burden for smaller banks, Treasury Secretary Scott Bessent said during an interview with the “All-In” podcast on March 18.

“We are reexamining all the bank regulations,” he said. 

Bessent singled out supplementary leverage ratio as one regulation that could be in the crosshairs, saying that banks must keep 5% to 7% of their deposits to buy Treasury bills as a safeguard to prevent adverse events like a run. 

“I had a whole group of community bankers and small banks here last week and they have to hold the same amount of capital that JP Morgan and Wells Fargo and Citi hold when they don’t have the complexity” of those large organizations, Bessent said. 

Bessent aims to drop the capital requirement for small banks, providing them with more lending capability, he said. 

2023 banking crisis a ‘wakeup call’ 

The string of bank failures in 2023 was a “wakeup call” to look at banking regulations more closely and tweak rules that don’t make sense, Bessent said during an address to the Economic Club of New York earlier this month. 

The Federal Reserve and the Biden administration did not act with speed after Silicon Valley Bank posted poor scores in its bank stress tests leading up to the crisis, Bessent said. 

“When risks were identified, they did not take sufficient steps to ensure that SVB fixed those problems quickly,” Bessent said, according to the U.S. Treasury Department’s transcript of the speech. “The result was the third-largest bank failure in United States history. It was a supervisory failure.” 

Regulations must be made in favor of small and community banks, Bessent said, adding that 4,000 community financial institutions hold just 15% of industry assets and deposits, but make up:  

• 40% of small business loans; 

• 70% of agricultural loans; and  

• 40% of commercial real estate loans. 

“Community banks are indeed overloaded with unproductive reporting requirements that have little to do with reducing material financial risk,” Bessent said. 

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