As president, Donald Trump has the ability to fire the leaders of the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau and appoint other financial regulatory heads when their terms expire. In his previous term, President Trump had a penchant for reducing regulation and initially tapped a CFPB director who sought to curb his agency's power.

All of this suggests the Federal Reserve's capital plan — known as the Basel III endgame — won't be implemented soon.

Isaac Boltansky, an analyst at BTIG, said while it's certain the rules will be softened — as they have already been in response to industry pushback — the dust will need to settle at the federal regulatory agencies before negotiation on the details of the rule can resume.

"At a minimum, I think that we're on hold until we get new leadership at the OCC and the FDIC — obviously the FDIC is going to have some changes to its board as well and that will alter that calculus and at that point, I think we can move forward," Boltansky said. "My sense is that ultimately, there's been a lot of work done to get to an acceptable framework, and that we can see this will finalize at some point in the future, but it's going to have to be negotiated from here, and I think that we should expect there to be other areas of softening accordingly."

The Basel III endgame, initially proposed in 2023, sought to raise capital requirements for banks with more than $100 billion in assets by 16%. This sparked intense pushback from the banking industry, which argued that such requirements would stifle business and lead to costly adjustments, especially given the proposal's broad applicability. 

As a result, regulators extended the comment period and, in response to industry feedback, Fed Vice Chair Michael Barr introduced a softer re-proposal in late 2024. Barr's revised framework lowered the capital requirement increase to 9% for the largest banks.

Under President Trump, even Barr's revisions now face an uncertain path forward, as the incoming administration may push for less regulatory oversight on capital requirements for banks.

Ian Katz, managing director of Capital Alpha Partners, believes Trump could unveil his choices for leaders of the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau in just weeks, since those officials can be fired at will. 

"We don't know if the Trump administration will nominate someone for the full-time OCC job or continue the recent practice of just having an acting OCC chief," Katz wrote in a note. "But the Trump administration would eventually nominate someone for the CFPB post."

The leaders of these agencies sit on the board of the Federal Deposit Insurance Corp. which, along with the OCC and the Federal Reserve Board, are the main decision-makers on the joint bank capital rule. Currently the FDIC board has a one-seat Democratic majority, and the balance of power would certainly be flipped by Trump's nominees. 

At some point, Katz wrote, the Republican regulators will put out a new Basel proposal, but "we don't think it will be Barr's." 

Greg Lyons of Debevoise & Plimpton suggested that while federal agencies might try to push a rule through by year-end, it's unlikely, particularly with the Federal Reserve having expressed support for a re-proposal. Lyons said he expects either a complete stall-out or a re-proposal under the new administration.

"The Republican members of the FDIC board, you know, gave indications that they didn't see what problems this was solving," Lyons said. "I think it would be a much more targeted, much more limited proposal than, certainly than it started out the first time, but probably even more [weakened] than Barr was expecting this time."

Karen Petrou, a managing partner at Federal Financial Analytics, expects the scope of the new framework to be further narrowed. Specifically, she anticipates the requirements being applied only to banks with $250 billion in assets or more and the market-based requirements being limited to the largest global systemically important banks and others with large trading books. She said some revisions could be made to cap operational risk weights and amend credit risk standards, too.

Overall, Petrou said, the final version of the Basel III endgame will be the result of a "very complicated negotiation" — one that would likely escape the attention of a potential Trump administration.

"Once you start bargaining over details, I can guarantee you, because I have been doing this forever, the White House will completely lose interest," she said. "Full stop."

Even under a Kamala Harris administration, the Basel III endgame proposal would likely be pared back, Petrou said, noting that recent Supreme Court decisions made it easier for banks to successfully challenge the rule in court.

"The industry holds the trump card, because if they don't like the final rule, regardless of which team makes it, they can always sue," she said. "And, under the new Supreme Court, they'll probably win."

Lyons said while party control of the House of Representatives remains uncertain, a Republican trifecta opens the door to further challenges to Biden-era financial regulations.

"The other wild card is whether the Republicans get the House, and I've seen some reports of them being favored to pull it off," he said. "Then the Congressional Review Act comes into play as well."

Congress can use the Congressional Review Act to overturn federal agency rules, including guidance documents and policy memoranda, even if they didn't go through standard notice-and-comment rulemaking. Overturning a rule under the CRA requires a majority vote in both the House and Senate, but if a rule is overturned, agencies are limited in issuing similar rules in the future.

The CRA is particularly useful during the "lookback period," where the current Congress can review rules from the prior Congress. While the exact date by which rules are subject to review is uncertain — since it depends on when Congress officially ends its current session — the Congressional Research Service projects that any Biden administration rules issued after Aug. 1, 2024, could be subject to CRA review if Republicans gain control.

Numerous Biden-bank regulations could come into the crosshairs if the Republicans control the legislative and executive branches. OCC guidelines for recovery planning by large banks, FDIC rules on advertising and insured status, and a CFPB rule on personal financial data rights, all issued in October 2024. Additional regulations, like the FDIC's revamped merger policy and the Financial Crimes Enforcement Network's anti-money-laundering regulations for real estate transfers, were finalized between August and September 2024. 

Kyle Campbell also contributed to this article.