CBA Statement On New Basel III Endgame Proposed Rule

Consumer Bankers Association (CBA) President and CEO Lindsey Johnson today released a new statement responding to a proposed rule unveiled by the Federal Reserve, Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC) seeking to implement the Basel III endgame agreement for large banks, including enhanced risk-capital requirements for all banks with $100 billion or more of total assets. 

“The American banking system is the most competitive and well-regulated in the world, providing the ability for consumers and small businesses to choose from thousands of banks – each with diverse business models – to meet their unique needs. Adding to their strength, America’s leading banks already hold significantly high levels of capital, and by every measure, including as evidenced by their recent performance in the Federal Reserve’s stress test, are strongly capitalized to be resilient even in some of the most severely stressed scenarios.  

“While policymakers have an important responsibility to ensure safety and soundness, a mandate that CBA and our members fully support, it is also critical they consider the impact new requirements may have on banks’ ability to meet the lending needs of the communities they serve, especially as the country contends with ongoing economic uncertainty. This is especially true for mid-sized and regional banks, which provide critical financing to so many important sectors of our economy and may now be forced to contend with additional capital burdens that could hamstring their capacity to extend credit. Constraining consumers’ and small businesses’ ability to access capital within the well-supervised banking system will force them to utilize less regulated lenders which, despite the fact they directly compete with traditional banks, continue to be conveniently exempted from any similar requirements. 

“It will take time to fully digest the significant changes to the current Basel framework included in today’s 1000+ page proposed rule as well the implications they will have on banks, consumers, small businesses, and the broader economy. Therefore, it is essential that policymakers take steps to fully understand its costs and benefits in the months ahead while also seriously considering industry feedback ahead of issuing a final rule.”

CBA Advocacy 

• In a statement issued after the Federal Reserve announced the results of the agency’s annual stress tests last month, Johnson said: “recognizing this year’s scenario was the most difficult on record, these outcomes are the best antidote to any lingering anxiety surrounding recent bank failures.” 
• Speaking in May at the Exchequer Club of Washington, D.C., Johnson reiterated that the market volatility observed earlier this year was fueled largely by emotion and misinformation not indicative of the strong underlying fundamentals of the vast majority of banks today. 
• During an interview on Fox Business, Johnson expressed confidence in the strength and resiliency of America’s leading banks while also reassuring consumers that their hard earned deposits are safe and secure.