The Proposal Will Have Real Consequences for Everyday Americans

Basel III Accord U.S. Finalization

The federal government’s Basel Endgame proposal will have real costs for everyday Americans. These capital requirements will create a drag on our economy for years to come — and will hurt working families and small businesses.

What is Basel Endgame?

The recently unveiled proposal from the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency aims to require financial institutions to hold significantly higher capital, as much as 16–19% more, depending on the size of the institution. This would limit banks’ capacity to offer things like mortgages, car loans, credit cards and small-business loans.

For many, the dream of owning a home will become more elusive, as the proposal drastically increases the capital charge for home mortgages with lower down payments, putting homeownership further out of reach for many buyers.

Small businesses will struggle because the proposal will make it harder to obtain financing, meet payroll and support their local communities.

Regulators claim this is necessary to protect the stability of the financial system, but it will have real consequences for families and small businesses across the country.

The proposal will have real consequences for everyday Americans.

How does requiring higher bank capital affect lending?

When capital requirements are set excessively high, it makes it much harder to secure a loan or credit — this is especially true for working families and small businesses. To learn more, please click here.

Will it make the economy more stable?


Instead of increasing stability, this will increase risk by creating market instability outside of regulators’ reach and pushing consumers to unregulated, more expensive financial services products. Private equity and hedge funds are exempt from the Basel requirements, and they will reap the benefits of diverted banking demand, driving higher consumer costs and greater market instability.

The capital requirements set by the Federal Reserve will have a dramatic effect on the U.S. economy. Studies show that every percentage point increase in capital requirements slashes about $42 billion of domestic output per year.

What Should Be Done?

The banking agencies should engage in a robust and thorough economic analysis of the proposal’s effects. Federal agencies need to go back to the drawing board and ensure that future policy allows millions of low-income Americans and small businesses to thrive.

Contact Your Representatives to Tell Them to Stop Basel Endgame

Basel Finalization: The History and Implications for Capital Regulation (Part I, II and III)


Basel Finalization: The History and Implications for Capital Regulation – Part III

basel accord cover image

New: Calibrating Bank Capital Requirements


Basel Primer Series

Basel Finalization: The History and Implications for Capital Regulation – Part II

Basel Part II – One-pager

Looking for a Needle in the Capital Stacks

Basel Primer Series

Basel Finalization: The History and Implications for Capital Regulation – Part I

Basel Part I – One-Pager

Striking the Basel Balance

Why it Matters

Rising Credit Costs for American Businesses

The Alternative

The European Approach to Implementation

Research and Analyses

U.S. Small Businesses Could Soon Be Paying More for Loans, Unless U.S. Regulators Act
U.S. and international regulators are currently implementing the Basel III framework, which includes rules around how much capital banks must hold to fund loans. While the European Union is considering giving small businesses flexibility, possible actions by U.S. regulators could result in U.S. small businesses paying more for loans than similar companies operating in Europe. Furthermore, these small business could also be paying more than large, publicly traded companies, and more than their true risk requires.

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