A group of 38 Republican senators, led by Sen. Tim Scott (R-SC), is urging federal financial regulators to withdraw the revised Basel III proposal.
Basel III is an internationally agreed set of measures developed by the Basel Committee on Banking Supervision in response to the financial crisis of 2007-09. The measures aim to strengthen the regulation, supervision, and risk management of banks. The so-called Basel III “endgame” proposal would include stricter capital requirements to ensure bank stability, particularly during difficult times.
In a letter to the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC), the senators said the proposal lacks proper analysis or data to justify its merit. They also contend it will result in costlier and more limited access to credit for Americans and will negatively impact the U.S. economy.
“Ultimately, these large increases in capital have not been shown to be evidentially based as the Federal Reserve, FDIC, and OCC have failed to provide proper analysis or data to justify their merits, particularly around the costs they will impose throughout all sectors of the economy. In fact, we have heard widespread concerns regarding the negative impacts that Basel III could have not only on affordable housing but on mortgage lending writ large, small business lending, and consumer lending. In addition, it would limit the availability of access to credit cards and home equity lines of credit. Similarly concerning, this proposal will ultimately put U.S. companies at a competitive disadvantage globally and could force U.S. companies to search for access to financial services from financial institutions abroad, rather than those here at home,” the senators wrote in the letter.
Every Republican on the Senate Banking Committee signed the letter, led by Ranking Member Scott and his colleagues also highlight the resilience of the well-capitalized U.S. banking system.
They added that a thorough cost benefit analysis should have been conducted well before releasing the Basel III proposal, they added.
“Any proposed changes to our bank regulatory framework must be based on demonstrable benefits and needs, not pre-determined agendas which will only serve to harm the economy and consumers alike. Accordingly, we urge you to withdraw the Basel III Endgame proposal as written and urge the Federal Reserve, the FDIC, and the OCC to operate in a more transparent and justified manner,” they concluded.