Washington, D.C. – The Federal Reserve, FDIC and OCC must conduct a full, public study into the costs of their Basel capital proposal and re-propose the rule after the study’s results are released, the Bank Policy Institute, American Bankers Association, Financial Services Forum, Institute of International Bankers, Securities Industry and Financial Markets Association and U.S. Chamber of Commerce wrote in a letter submitted today. Short of a re-proposal, the agencies should extend the comment period on the proposal to 120 days after the study’s release. The significant economic impacts of the proposal, as well as legal requirements, demand a robust analysis of the proposal’s effects.
Key quote: “The banking agencies took more than five years to propose an implementation of the Basel accord, during which time they could have studied its impact on banks, their customers and the economy. Instead, regulators improperly proposed to start that process during the comment period; even then, more than 60 days into that period, they have failed to send out the required template to conduct it. Given the significant stakes for the U.S. economy, it needs to be rethought and restarted.” – BPI, ABA, FSF, IIB, SIFMA and U.S. Chamber
Background: The banking agencies proposed a rule to implement the final Basel agreement on bank capital requirements on July 27, 2023. This proposal not only overstates the risk of banks’ business lines by tacking on extraneous surcharges on top of those in the international agreement, but it also violates the law by failing to provide adequate supporting data and analysis. It is necessary for the banking agencies to undertake a quantitative impact study of the proposal; their approach to date in doing so illustrates alarming gaps, both procedural and substantive, in their rulemaking process.
Bottom line: The public has a right to know how this proposal would affect the economy before providing input on it. The proposal’s length and complexity necessitate ample time for banks, businesses and other stakeholders to understand and analyze its impact. Even if the banking agencies proceed with the required impact study, such a study would not correct numerous other flaws in the proposal.
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.
About the American Bankers Association
The American Bankers Association is the voice of the nation’s $23.5 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2.1 million people, safeguard $18.6 trillion in deposits and extend $12.3 trillion in loans.
About the Financial Services Forum
The Financial Services Forum is an economic policy and advocacy organization whose members are the chief executive officers of the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.
About the Institute of International Bankers.
The Institute of International Bankers (IIB) represents internationally headquartered financial institutions from over thirty-five countries around the world doing business in the United States. Its members consist principally of international banks that conduct U.S. operations through branches and agencies, bank subsidiaries, and broker-dealer subsidiaries. The mission of the IIB is to help resolve the many special legislative, regulatory, and tax issues confronting internationally headquartered financial institutions that engage in banking, securities, and/or insurance activities in the United States.
About Securities Industry and Financial Markets Association
SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s one million employees, we advocate on legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.
About the U.S. Chamber of Commerce
The Chamber of Commerce of the United States is the world’s largest business organization. Our members range from the small businesses and chambers of commerce across the country that support their communities, to the leading industry associations and global corporations that innovate and solve for the world’s challenges, to the emerging and fast-growing industries that are shaping the future. For all of the people across the businesses we represent, the U.S. Chamber of Commerce is a trusted advocate, partner, and network, helping them improve society and people’s lives.
Bank Policy Institute