US banks expect regulatory relief in 2026 as federal bank regulators pursue an ambitious agenda to reduce compliance burdens.
The industry anticipates progress on regulatory goals, including updates to CAMELS ratings and asset thresholds, as well as the implementation of the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act in 2026. Banks also expect agencies to finalize 2025 proposals on stress tests and the community bank leverage ratio.
Another top agenda item is the new Basel III endgame proposal, which is expected to include lighter risk weighting for mortgages, an area banks had criticized for being too burdensome in the previous proposal. Many banks have exited the mortgage servicing business, but lower risk weights could encourage their return.
"There's a highly crowded regulatory agenda, which includes a lot of capital, liquidity, material financial risks and also includes very core things like [the Bank Secrecy Act/anti-money laundering], [Community Reinvestment Act], open banking and GENIUS Act, digital assets," Margaret Tahyar, partner and head of the Financial Institutions practice at Davis Polk & Wardwell LLP, said in an interview.
Overall, regulators' plans should make it easier for banks to grow organically or through M&A, particularly by removing asset threshold barriers and easing capital requirements.
Supervision shift
Bank supervision is shifting, building on recent changes, such as a memo from the Board of Governors of the Federal Reserve System detailing how it will focus exams and regulatory orders on material financial risk.
As a result, supervisors will be more selective with enforcement actions, according to Young Kim, counsel advising on bank regulation at Clifford Chance LLP. Supervisors will focus less on procedural violations and more on the impact of these violations. Severe violations may result in enforcement actions. They will focus less on a "check the boxes exercise" and more on "where do the risks in the bank lie," Kim said in an interview.
Supervision is also focusing on "debanking," following an executive order from President Donald Trump in August, and a subsequent review by the Office of the Comptroller of the Currency (OCC) that identified issues at nine large banks. The next steps after the review remain unclear. Advisers connected these developments to the fair access rule, which was issued by the OCC in January 2021, at the end of Trump's first administration, but did not take effect. Advisers said similar concepts may reemerge in 2026.
"I definitely think the fair access rule as a concept is back on the table, even though the rule in '21 never took," Robert Maddox, a partner at Bradley Arant Boult Cummings LLP and a bank deal adviser who represents clients before regulatory agencies, said in an interview.
A related issue is whether to consider reputation risk in banks' portfolios. Although federal bank regulators have removed reputation risk from their guidance, Tahyar noted that the Federal Reserve has yet to remove it from the rules, which carry greater legal weight and are harder to reverse than guidance.
Consumer Financial Protection Bureau
Although the Consumer Financial Protection Bureau (CFPB) was scaled back in 2025, it is preparing to issue an interim "open banking" rule proposal to implement section 1033 of the Dodd-Frank Act, following a court case. The rule concerns consumers' rights over their personal financial data and governs how banks and fintech companies can share this information. Fintechs generally supported the rule, while banks challenged it in court.
The CFPB is in the process of narrowing the scope of its small business data collection under Section 1071 of Dodd-Frank. Banks were critical of the wide scope in the original rule.
Despite the CFPB's reduced role, banks must remain mindful of compliance with existing laws.
"The laws still apply, and statutes of limitations are long, and the pendulum can swing back and forth," Cliff Stanford, partner at Alston & Bird LLP, said in an interview.
Regulatory staffing cuts
Staffing cuts at federal bank regulators could have a significant impact on banks. Both bank and credit union regulators reduced staff in 2025, primarily through deferred resignation programs or early retirements.
"I don't think any of the regulators are going to say that that is going to slow their response time, but the reality is you only have so many resources with which to work," Maddox said. "They're also not going to say that it's weakening supervision."
Maddox said that with fewer staff, regulators will likely conduct more remote exams. Recently, one client underwent two weeks of off-site examination and one week on-site, while another had two weeks off-site.
Additional supervisory staff cuts are expected. The Federal Reserve plans to reduce its Board's supervisory staff by 30% to about 350 from nearly 500 by the end of 2026, according to an internal memo reviewed by S&P Global Market Intelligence. The Federal Deposit Insurance Corp. expects to have 1,330 fewer employees, exceeding its initial estimate of 1,200, according to a November Bloomberg Law report.
Advisers and industry observers expressed concern that a smaller supervisory staff might overlook bank issues, though some believe agencies can manage by refocusing on core financial topics.
"Given the recalibration and refocusing of the subject matter emphasis of their supervision, trimming or restating or reorganizing does make sense, and so it's a result of the realignment of their direction in terms of supervision, at least as it's been telegraphed," Alston & Bird's Stanford said. "The other side of the coin maybe is that if that's done too abruptly or in a fashion where talented, experienced examiners leave, there is a potential for a brain drain, and potentially issues could arise as a result of that. ... Each agency just needs to manage through that, and my working assumption is that that's what they're doing."
