If finalized, the 2026 banking proposals would represent some of the most significant changes to bank capital standards since the reforms enacted in the wake of the 2008 financial crisis.

As discussed in our recent Alert, on March 19, 2026, U.S. federal banking agencies released a series of proposed rules that would, among other things, lower the amount of capital that banks are required to hold against potential losses, change the risk weights that other banking organizations apply to credit exposures, and change the method for calculating the capital surcharge for global systemically important banking organizations. If finalized, the 2026 banking proposals would represent some of the most significant changes to bank capital standards since the reforms enacted in the wake of the 2008 financial crisis. Comments on the proposals are due by June 18, 2026.

One aspect of the proposals worth highlighting is the significantly expanded definition of "commitment." Under the current capital rule, a "commitment" is defined as any legally binding arrangement that obligates a banking organization to extend credit or purchase assets. The agencies have noted that they have received questions from banking organizations regarding whether certain types of arrangements, such as advised credit lines and uncommitted lines, would qualify as commitments, and have observed inconsistent application of the current definition across the industry. The proposals would broaden this definition to include any contractual arrangement under which a banking organization and an obligor agree to terms applicable to one or more future extensions of credit, purchases of assets or issuances of credit substitutes—whether or not such arrangement is unconditionally cancelable. This is a meaningful change for banks and borrowers that enter into uncommitted facilities such as bilateral lines for the issuance of letters of credit, which previously were not subject to a capital charge. Notably, however, the agencies have clarified that the revised definition is not intended to capture arrangements where a banking organization has merely offered potential terms to a potential obligor or that continue to be subject to negotiation between the parties. Some examples include pre-approval letters for residential mortgage loans, credit card offers or other offers that have not yet been agreed upon by both parties. The impact may be particularly significant in the commercial real estate lending space, where most CRE warehouse facilities are uncommitted and all advances require lender approval. Under the expanded definition, these facilities could be subject to a capital charge where the banking organization and borrower have agreed to material terms, even if the banking organization retains full discretion on whether to extend credit. The proposal would also increase the credit conversion factor for unconditionally cancelable commitments from zero percent to 10 percent, reflecting the agencies' view that, in practice, risk management considerations and customer relationship dynamics may constrain a banking organization's willingness to cancel such commitments even when it has the contractual right to do so.

Banking organizations and their borrowers should carefully evaluate how these proposed changes may affect their uncommitted facility arrangements and consider submitting comments before the June 18 deadline.

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If you have any questions about this Alert, please contact Jonathan M. Petrakis, Joel N. Ephross, Max W. Fargotstein, any of the attorneys in our Banking and Finance Industry Group or the attorney in the firm with whom you are regularly in contact.

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