Will the final Basel III endgame / G-SIB surcharge rules published in 2026 materially reduce GS's required CET1 capital versus the 2023 original proposal?
Current Prediction
Why This Question Matters
Favorable Basel III finalization is the single biggest forward catalyst that could tighten the bull thesis on GS. Management's aggressive deployment is partly predicated on the regulatory tailwind materializing. If the rules publish favorably within 2026, the capital plan is validated; if they don't publish or publish unfavorably, the capital plan must be revised.
Prediction Distribution
Individual Predictions(9 runs)
Direction is clearly favorable but timing and magnitude are uncertain. Typical Fed rule-making timeline from re-proposal to finalization is 9-12 months. If re-proposal was published Q1 2026, final rules might publish Q4 2026 or slip into 2027. Even if 2026 publication happens, resolution requires >50% reduction from original — which is likely given the re-proposal direction but not guaranteed. Combined probability of timing AND magnitude is ~40-45%.
45% — slightly higher than my first run because the re-proposal is already favorable enough that finalization with >50% reduction seems likely conditional on publication. The key question is timing: will Fed/OCC/FDIC jointly publish in 2026? That's the bigger uncertainty. If publication happens, YES is highly likely.
40%. Rule-making slippage is common. 2026 is a midterm election year which may push priorities around. Even a well-intentioned timeline has real risk of slipping into 2027. The substance looks favorable but timing is the constraint.
The re-proposal direction is clear enough that final rules likely match or closely follow. The question is really just about 2026 timing. Comment period + drafting + joint publication = 9-12 months typical. 44% reflects moderate probability of successful 2026 publication.
40%. The Fed has been working on this for years. The re-proposal represents significant progress. 2026 publication is plausible but not guaranteed. I weight the timing risk substantially.
42%. Management is optimistic on the call, which is a positive sentiment signal from a sophisticated counterparty with regulatory dialogue access. But management optimism doesn't necessarily accelerate the rule-making timeline.
40%. Base case timing suggests 2026 publication is possible but slippage is the main risk. Direction favorable conditional on publication.
43%. Management's explicit optimism + clear re-proposal direction = moderate probability of 2026 favorable finalization. Still below 50% because of timing uncertainty.
41%. Roughly 2:3 odds of favorable 2026 finalization. Direction yes, timing uncertain.
Resolution Criteria
Resolves YES if final Basel III endgame and/or G-SIB surcharge rules are published in calendar year 2026 AND GS management (or analyst consensus) characterizes the final rules as materially reducing required capital relative to the original 2023 proposal (e.g., reduction of at least 50% in incremental RWA inflation). Resolves NO if no final rules are published in 2026, OR if final rules do not materially reduce capital burden.
Resolution Source
Federal Register publication of final rules; GS management commentary in subsequent earnings calls; Fed/OCC regulatory announcements
Source Trigger
Basel III / G-SIB Final Rule Publication — favorable vs unfavorable determines capital plan
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