Our community is strongest when everyone has a real shot at building a better life. Whether it's buying a first home, starting a small business, or saving for retirement, people deserve a fair shot to achieve their version of the American dream.

As an entrepreneur in Tennessee, access to capital is critical whether it is starting your first business or establishing roots. And I recognize the importance of ensuring that future generations of entrepreneurs and families have this opportunity.

But to do so requires moving away from outdated banking rules that make it harder to get ahead.

The issue is capital requirements for banks. These regulations dictate how much capital (cash) banks must hold. Following the 2008 Financial Crisis, new requirements were imposed on banks. As a result, America's eight largest banks now hold nearly $1 trillion in reserves.

However, these requirements are causing these banks to not just be well-capitalized but over-capitalized. A sentiment that even regulators at the Federal Reserve and multiple Treasury officials agree with.

Over the last 15 years, America’s eight largest banks have tripled their capital holdings to nearly $1 trillion. In the last five years alone, their capital has risen by 18 percent, and requirements are higher than those imposed on the largest banks abroad, including in the United Kingdom and the European Union. These excessive requirements not only put our economy at a disadvantage but also make credit more expensive and harder for consumers and small businesses to access.

When banks must hold excessive capital in reserve, they have less money available to lend. That means higher loan interest rates and tighter lending standards. For small business owners, it's tougher to grow and expand with new hires, new locations, or purchases of upgraded equipment. For consumers, young families face higher interest rates when buying their first home or a new car. Those saving for retirement or college tuition see lower returns as mutual funds and pension plans face higher borrowing costs. These aren't abstract policy issues; they’re real barriers that affect people's lives every day.

The good news is that federal regulators are now considering changes to these rules. But it’s important that they make the right changes, specifically by lowering capital requirements. Reducing capital requirements would give banks more flexibility to lend at lower rates. Families could get mortgages with lower monthly payments. Small businesses could secure affordable loans to expand and create jobs. Savers would see better returns on their retirement accounts.

This isn't about choosing between economic growth and financial stability. We can have both. Multiple stress tests, including the COVID-19 pandemic, have confirmed what we already know about the current state of capital requirements: America’s banks can weather any financial storm.

Now’s the time for a much-needed reduction. It would mean more affordable mortgages and car loans, more small business expansion, more jobs, and stronger communities across Tennessee and nationwide. Most importantly, it would make the American Dream more accessible for everyone.


Jacob Sykes is a Nashville-based entrepreneur and technology consultant. He is the founder of Platefol, a data-driven software platform tailored for the restaurant industry. Throughout his career, Jacob has specialized in the government software sector, with a focus on banking solutions for the corrections industry. He is an active member of the Tennessee Young Republicans and served as co-founder and president of the College Republicans at Belmont University.