Washington. D.C. – Bank Policy Institute President and CEO Greg Baer will testify today before the House Financial Services Committee’s Subcommittee on Financial Institutions and Monetary Policy at a hearing entitled “Rules Without Analysis: Federal Banking Proposals Under the Biden Administration.” In his testimony, Baer focuses on the banking agencies’ Basel capital proposal’s effects on the cost of credit and harm to U.S. capital markets, in addition to the lack of cogent analysis underpinning it.
Key quote: “If adopted, the capital rule proposed by the federal banking agencies would have a profound effect on the availability and cost of credit for nearly every American business and consumer, as well as on the resiliency of U.S. capital markets. Given the stakes involved, the proposal is remarkable for its lack of analytical rigor, and its aversion to the use of relevant data.” – Greg Baer, BPI President and CEO
Background: BPI submitted two comment letters earlier this month to the federal banking agencies on their Basel capital proposal, which would dramatically increase banks’ capital requirements and borrowing costs for businesses and consumers. One letter laid out substantive issues with the proposal and recommended remedies, and the other focused on the legal problems with the proposal. The proposal would increase the costs and decrease the availability of products like car loans, credit cards, small business loans and mortgages. The banking agencies also violated obligations under the Administrative Procedure Act in formulating a proposal without the required analysis and reasoning.
Bottom line: The Basel proposal would impose significant costs on the U.S. economy, and there is insufficient economic justification for the rule in its 1,000-plus pages. The agencies should re-propose the rule, conduct the proper economic analysis and give the public a meaningful opportunity to respond to it. “We urge the agencies to withdraw this proposal, draft a new one, show their work, and seek public comment,” Baer said.
Read more: StopBaselEndgame.com
About Bank Policy Institute
The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.
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