If Hollywood has taught us anything, it’s that there’s no finality in anything branded with “endgame.” Policymakers at the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency have worked for more than a year to finalize rules intended to strengthen the financial cushions of large banks— known as the “Basel III endgame.” The proposals, based on standards negotiated with international regulators in 2017, were intended to represent the final iteration of major rules imposed on banks after the global financial crisis. But the proposed changes were deemed too onerous by major institutions like JPMorgan Chase, Citibank and Wells Fargo. Big banks mounted a massive lobbying and public pressure campaign last year after the federal banking regulators proposed new rules for financial resilience. Key officials like Federal Reserve Chair Jerome Powell have signaled that they’d like to overhaul the proposal, all but assuring the rules won’t be finished before the next presidential administration begins in January. If former President Donald Trump defeats Vice President Kamala Harris, that will raise serious questions about whether any element of the current proposal survives. In other words, just like every interminable Marvel franchise, the Basel III endgame proposal may soon get a sequel. More from POLITICO’s Michael Stratford and Victoria Guida: The regulators “have been unable to reach a consensus on what their next steps should be, according to people familiar with the discussions, further complicating efforts to agree on revisions to the proposal, which would sharply increase banks’ capital requirements… The impasse reflects the tension between progressive regulators empowered by the Biden administration and more industry-sympathetic voices like Federal Reserve Chair Jerome Powell. It also underscores the proposal’s complexity: While higher capital requirements are generally popular among Democrats looking to avoid future bank bailouts, aspects of the draft have gotten pushback even from progressive allies, like civil rights groups… Officials have discussed putting out a new analysis of the proposal that relies on updated data alongside a set of about 20 questions that solicit further public feedback on some of the changes that regulators are weighing, according to people familiar with the discussions. But there’s no clear agreement on taking such a step. Either way, industry experts say the banks are likely to come out ahead.” It also raises the specter of a major fight that Harris could inherit if 1) she wins and 2) the regulators don’t come to an agreement soon. Democrats on the Senate Banking Committee like Sen. Mark Warner (D-Va.) and Jon Tester — who’s locked in a tight reelection battle — have raised concerns about the current proposal. Republicans led by Sen. Tim Scott (R-S.C.) have been even more aggressive, calling on the agencies to scrap the current version. Depending on the makeup of the Senate, any Harris appointees to the banking agencies would face a gauntlet of questions about how they would address the impasse. “The banks have won,” Dennis Kelleher, who leads Better Markets, an advocacy group pushing for a strict rule, told Michael. “They have delay, stalemate. … It doesn’t get better than that if you’re Wall Street.” IT’S MONDAY — RIP Alain Delon. Rocco and His Brothers, Le Samourai, La Piscine… I’ll take that over a superhero sequel any day. You can email me tips (or to tell me I’m a giant snob) at ssutton@politico.com.
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