“. . . the Federal Reserve seemingly acknowledged that it did not appropriately consider the impacts of the proposal when it began an additional data collection in October 2023 . . . How can we as legislators, or any of the American public, be asked to weigh in on a proposal, the effects of which the proposal’s authors do not yet fully comprehend?”
MADISONVILLE, La. – Sen. John Kennedy (R-La.), a member of the Senate Banking Committee, joined Sen. Tim Scott (R-S.C.) and all Senate Banking Republicans in urging regulators to withdraw the Basel III Endgame Proposal, which would raise bank capital requirements.
Kennedy joined colleagues in urging regulators to discard the proposal in November. In the initial letter, senators raised concerns that the proposal would affect affordable housing, mortgage lending, small business lending and consumer lending; limit the availability of access to credit cards and home equity lines of credit; and put U.S. companies at disadvantage to foreign competitors.
“As we noted in our November 12, 2023, letter to each of you, your agencies have still yet to justify the need for this proposal with any sufficient economic analysis or proof that the banking system is currently under capitalized. Since we last wrote to you, our concerns have not been mitigated, and testimony from the November 14 and December 6, 2023, Senate Banking Committee hearings has only deepened our resolve that this proposal is flawed and must be withdrawn,” the senators wrote.
“Following the November 14 hearing, on December 6, 2023, we heard testimony from the CEOs of the eight largest banks in this nation, which largely discussed how the proposal would hinder economic growth and reduce lending to households and businesses . . . During that hearing and since, we continue to hear particularly concerning testimonies about the outsized negative impacts the proposal would have on minority communities, especially LMI and minority borrowers,” they continued.
“As backdrop to all of this, the Federal Reserve seemingly acknowledged that it did not appropriately consider the impacts of the proposal when it began an additional data collection in October 2023 . . . How can we as legislators, or any of the American public, be asked to weigh in on a proposal, the effects of which the proposal’s authors do not yet fully comprehend?” the senators concluded.
Background:
- In July, the Federal Reserve, Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation issued a joint notice of proposed rulemaking for revising bank capital requirements, known as Basel III Endgame.
- Revisions to capital requirements in the proposal come from changes to international capital standards, which the Basel Committee on Banking Supervision in Switzerland issued in response to the 2007-2009 financial crisis.
- Regulators intend to apply their rule to banks with over $100 billion in assets, which would impact the largest banks in the U.S. and change how they conduct lending and trading.
Sens. Mike Crapo (R-Idaho), Mike Rounds (R-S.D.), Thom Tillis (R-N.C.), Bill Hagerty (R-Tenn.), Cynthia Lummis (R-Wyo.), J.D. Vance (R-Ohio), Katie Britt (R-Ala.), Kevin Cramer (R-N.D.) and Steve Daines (R-Mont.) also signed the letter.
The full letter is available here.