Areas to Watch in a “Watershed” Year for Regulation

In an article published in the Wall Street Journal’s Risk & Compliance Journal earlier this month, Deloitte’s Irena Gecas-McCarthy, Shaun Nabil, Jennifer Burns, Kyle Cooke, and Aaron Salerno argue that 2026 may prove a “watershed” year for US bank regulation and supervision.

New leadership at federal banking agencies is reshaping supervisory priorities, with examiners expected to focus more narrowly on risks “directly affecting a bank’s financial health.” The authors note that regulators are raising supervisory thresholds and reducing emphasis on reputational risk, which may result in fewer supervisory actions and remediation requirements overall.

Capital reform will play a central role in the coming year as well. Changes related to Basel III Endgame, leverage ratios, and stress testing will affect banks’ cost of capital and competitive positioning. The authors encourage institutions to reassess their capital strategies as requirements continue to evolve, and note that regulators are reevaluating thresholds with the goal of creating a more adaptive regulatory system.

The article also points to a more commercially oriented supervisory posture — one that encourages innovation, new bank charters, and mergers. On innovation specifically, the authors note that while regulators are signaling openness to new technologies, they continue to expect disciplined model governance, explainability, and third-party risk management. The authors are clear that the shift in tone does not reduce expectations around governance more broadly.

“By focusing on effective risk management, operational discipline, compliance, and governance, financial institutions can transform compliance and risk from challenges into strategic assets no matter future changes,” the authors conclude.