Federal regulators revealed this week that they are considering changing proposed Basel III capital requirements for available-for-sale securities. Banks have raised concerns about the proposed treatment of available-for-sale securities, which could cause capital volatility and force sales of debt tied to the government-sponsored enterprises and the Treasury Department. In June, federal regulators proposed changes to the treatment of accumulated other comprehensive income that would require unrealized gains and losses on available-for-sale securities to flow through to regulatory capital as opposed to the current treatment, where unrealized losses generally do not affect a bank’s regulatory capital. At a Senate Banking, Housing and Urban Affairs Committee hearing this week, Michael Gibson, director of the Federal Reserve’s division of banking supervision and regulation, indicated...