CBA Joint Letter to Sen. Shelby Supporting The Basel III Impact Study Act

Dear Senator Shelby:
The undersigned organizations wish to express our support for S. 737, the “Basel III Impact Study Act”, particularly the provisions that would require the Federal banking agencies to perform a Quantitative Impact Study (QIS) of the proposed Basel III framework. We were also pleased to see similar legislation, H.R. 1221, introduced in the House of Representatives by Congressman Stephen Fincher last month.
We are particularly concerned that the proposed U.S. version of the rule goes beyond what the Basel Commission recommended with respect to capital treatment of real estate finance assets. The harmful impact of these unique-to-the-U.S. provisions on the housing market, the domestic economy and on the competitiveness of the U.S. financial industry remains largely unmeasured, and is entirely avoidable.
Quantitative Impact Studies are valuable tools for ensuring that regulatory initiatives are not unduly burdensome, particularly those with far reaching impact, such as Basel III. We believe that a QIS will provide much-needed additional information regarding the costs and effects of Basel III implementation, particularly in the areas of mortgage servicing rights and the cost of mortgage credit to American borrowers.
We understand that the Basel III Framework must strike a careful balance between safety and soundness and economic growth. However, before the rules take effect, the banking regulators should test the impact the proposal will have to make certain that banks can continue to lend and do business appropriately. This will help to ensure that homebuyers, small businesses, and families who want and merit mortgage credit will not be negatively impacted by Basel III.
We applaud the introduction of S. 737, as well as the introduction of H.R. 1221. These bills serve as crucial reminders that significant rulemaking initiatives, such as those currently impacting the housing finance industry, should justify their significant costs.
Consumer Bankers Association
Consumer Mortgage Coalition
Mortgage Bankers Association
National Association of Realtors