Legislators Agree that Basel III Needs Major Revision
Commentary by Sebastian Souchet
Senate Banking Committee Ranking Republican Tim Scott called for a complete withdrawal and re-proposal of the Basel Endgame framework; House Financial Service Committee Democrats applauded Fed Vice Chair for Supervision Michael Barr's announcement that he will recommend a re-proposal of the rules. (See previous coverage.)
Senator Scott (R-SC) argued that the proposal would result in "higher costs and limited access to credit for hardworking Americans." He called for financial regulators to provide a comprehensive cost-benefit analysis to justify any re-proposal. Senator Scott said Mr. Barr's "announcement only underscores that this proposal should be withdrawn and properly re-proposed in its entirety."
House Financial Services Committee Democratic members Gregory W. Meeks (D-NY), Joyce Beatty (D-OH), Juan Vargas (D-CA) and Steven Horsford (D-NV) issued a statement supporting Mr. Barr's "announcement that he will recommend that the Board re-propose the Basel endgame rules, and the acknowledgement that broad and material changes to the proposals are warranted." They urged the regulators to "carefully consider how the proposal may impact underserved and minority communities seeking small business credit and mortgage loans."
Commentary
Taken together, the statements by Senator Scott and the Democratic congressmembers are further evidence of how the federal banking regulators eventual re-proposal of the Basel III endgame rules is not only a product of banks and industry trade groups raising numerous legitimate concerns over the impact of the original July 2023 proposal, but also of bipartisan support in Congress for such re-proposal.
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Federal Reserve Board Vice Chair for Supervision Michael S. Barr outlined his recommendations for a re-proposal of (i) the Basel III endgame and (ii) the proposed adjustments to the Global Systemically Important Bank surcharge.