The Bank Policy Institute (BPI) launched an ad campaign this week on what it contends are the consequences of a proposal to increase capital requirements for banks.
The ad campaign, called “Stop Basel Endgame,” focuses on the potential impacts of higher capital requirements on small businesses and families and encourages Americans and their representatives to demand that regulators revisit the Basel proposal.
BPI said the proposal will result in a nearly 20 percent increase in capital requirements for the largest U.S. banks. They said that excessively raising current capital requirements will make it harder for Americans to secure a loan or necessary credit, which in turn will reduce economic growth,
The proposal was issued by the Federal Reserve, Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency,
“We have never before run an ad campaign of this magnitude, but this proposal is so alarming that we are compelled to use every resource at our disposal,” BPI President and CEO Greg Baer said. “The Basel proposal includes unexplained and inexplicable capital charges that will have significant consequences for American businesses and consumers as well as the vitality of our capital markets. Rather than moving forward with a proposal that lacks transparency, accountability or adequate analysis, regulators should withdraw the proposal and reevaluate their efforts.”
BPI cited studies that say that for every percentage point increase in capital requirements, domestic output is reduced by about $42 billion annually.
The ad campaign also highlights that large banks are well capitalized and highly resilient to economic downturns. In addition, it says that the proposal imposes measures that are more extreme than what was established under the original Basel agreement, and effectively repeals rules that tailored regulations to a bank’s size and business model.
Further, the ads claim that the proposal was developed without transparency with no analysis to support the vast majority of these increases.