Goldman Sachs-backed study warns simpler bank rules could spur loopholes

A paper headed to the ECB Forum on Central Banking in Sintra argued that stripping bank rules down to the simplest version can make them easier to game, not safer. For Goldman Sachs employees, that shifts the debate from less regulation to better-designed regulation, and puts risk, compliance and policy teams closer to the center of the conversation.

The paper, titled The stringency and complexity of post crisis bank regulation, will be presented Tuesday, June 30, in Sintra, Portugal, in a session chaired by Frank Elderson. Mariassunta Giannetti, Cameron Ellis and Chotibhak Jotikasthira are listed as the authors. Its abstract separates the stringency of regulation from its complexity and says the authors built cumulative country-quarter indices for 21 advanced economies from 1995 to 2025 using iMaPP and MaPPED events.

That distinction matters for Goldman because the firm sits in the middle of the capital, trading and underwriting activity that regulators keep trying to calibrate. If a lighter rulebook simply pushes risk into easier-to-reach pockets, the result can be more work for compliance and more structuring pressure on bankers, not less. The study also warns that its evidence may not fully capture risk in less-regulated areas such as private credit and private-equity-backed lending, a point that lands directly in front of product teams looking for returns outside traditional balance-sheet lending.

The timing is awkward for banks that have been arguing for relief. The Federal Reserve’s 2026 stress test, released June 24, said all 32 large banks stayed above minimum capital requirements even after a hypothetical recession that produced more than $708 billion in projected industry losses. Goldman said the results showed it remained well capitalized, and the Fed said Goldman’s stress capital buffer notice is ordinarily issued by June 30 and finalized by August 31.

Goldman has already lived through how much capital rules can change the internal math. Its stress capital buffer was initially set at 6.4% in June 2024, then revised to 6.2% after reconsideration, and the 2025 requirement fell to 3.4%, implying a 10.9% standardized CET1 requirement effective October 1, 2025. Those numbers shape everything from balance-sheet deployment to compensation pools, because capital consumed in one business line cannot be used in another.

The pressure points go beyond Goldman. On March 19, U.S. banking agencies proposed three capital-rule changes aimed at streamlining requirements, and Wall Street groups have continued pressing for looser Basel rules. Goldman’s 2025 results, $58.3 billion in net revenues, $51.32 in earnings per share and a 15.0% return on equity, show why the firm wants flexibility. But the Sintra paper suggests that a simpler rulebook is not automatically a lighter one for the people inside the bank who have to live with it.