Marsh Lobbies Fed to Ease Capital Rules for AI Loan

Marsh & McLennan Cos., the world's largest insurance broker, is pressing US regulators to reduce capital requirements for banks that insure AI-related loans, arguing that current rules put American lenders at a disadvantage compared to European competitors. The lobbying effort targets the Federal Reserve's upcoming regulatory capital package, with a decision expected by the end of 2026.

Regulatory Advocacy for AI Loan Capital Relief

Azi Larsen, managing director in Marsh's credit specialties practice, confirmed the firm has been conducting extensive advocacy with US regulators. "We've been doing a lot of advocacy around that in the US," Larsen told Bloomberg News. "Hopefully we'll have a positive answer from the US regulators at the end of the year," she added. Officially launched on November 11, 2026, this public lobbying campaign comes as Vice Chair for Supervision Michelle Bowman confirmed the Fed will complete its latest capital rules in the coming weeks.

The regulatory package is expected to include provisions lowering capital surcharges for the biggest US lenders and changing risk-based capital requirements for midsize and large banks. Marsh's proposal would allow banks to hold less capital against loans covered by credit risk insurance, mirroring practices already common in Europe.

European Banks Lead in Credit Risk Insurance Adoption

European financial institutions have long used credit risk insurance to mitigate losses and release capital for additional lending. Banks pay premiums to cover a percentage of losses on specific facilities, effectively transferring risk to insurers. Barclays Plc has been looking to buy coverage on more than $10 billion of data center debt, while HSBC Holdings Plc has explored similar transactions.

US lenders have traditionally relied on other risk management instruments because current regulations don't provide the same capital relief benefits. Despite this limitation, American banks are increasingly turning to credit risk insurance to cap exposure to specific borrowers or industries as AI-related lending volumes surge.

Data Center Financing Boom Drives Demand

Global spending on data centers is projected by McKinsey & Co. to reach $6.7 trillion by 2030, creating unprecedented demand for debt financing. This explosive growth has made finding diverse risk management tools "mission critical" for lenders, according to Larsen. Marsh is actively arranging credit risk insurance for project finance deals related to data centers, even as US banks operate under capital constraints that European competitors don't face.

"Even if they don't get capital relief, they still see value in trying to use it," Larsen noted, indicating that US banks recognize the hedging benefits despite regulatory disadvantages. The insurance covers specific percentages of loan losses, allowing banks to manage concentration risk across their AI infrastructure portfolios.

What This Means

If the Federal Reserve approves Marsh's proposal, US banks could unlock billions in lending capacity for AI infrastructure projects without increasing their balance sheet risk. This regulatory shift would level the playing field with European competitors and potentially accelerate the buildout of data centers needed to support expanding AI workloads. The decision, expected before 2027, could reshape how American financial institutions approach the multi-trillion-dollar AI infrastructure financing market and influence global lending standards for emerging technology sectors.