U.S. Senate Banking Committee Hearing: "Oversight of Basel III - Impact of Proposed Capital Rules"

The Senate Committee on Banking, Housing and Urban Affairs held a hearing to discuss Basel III and the impact which the federal banking agencies' proposed regulatory capital rules will have on the U.S. financial system. The Committee heard testimony from Michael Gibson, a Director of the Division of Banking Supervision and Regulation at the Federal Reserve; John Lyons, Chief National Bank Examiner at the OCC; and George French, Deputy Director of Policy of the Division of Risk Management Supervision at the FDIC.

Gibson's testimony reviewed the proposed capital changes, the Fed's analysis of their impact, and public comments on the proposal. In particular, Gibson noted that the agencies will "remain sensitive to concerns expressed by community banking organizations," and stated that these agencies will seek to further tailor the requirements as appropriate for community banks. He also reiterated that the agencies do not expect to finalize the proposal by January 2013.

Lyons's testimony discussed the concerns that commenters had raised regarding the proposed capital rules, but likewise focused primarily on comments made by community bankers. Like Gibson, he emphasized that the agencies did not adopt a "one-size-fits-all" approach in developing the U.S. capital proposals. He stated that the agencies will continue to consider ways to reduce regulatory burden "without compromising our two key principles of raising the quantity and quality of capital and setting minimum standards that generally require more capital for more risk."

French's testimony provided an overview of the three agency proposals, and noted that, while strengthening the capital base of the U.S. banking system is an important goal, it "should be achieved in a way that is responsive to the concerns expressed by community banks about the potential for unintended consequences."

Click hereto learn more about the hearing (links externally to U.S. Senate Banking Committee website).See: Testimony from Michael S. Gibson (FRB - Director, Division of Banking Supervision and Regulation); Testimony from John C. Lyons (OCC - Chief National Bank Examiner); Testimony from George French (FDIC - Deputy Director, Policy, Division of Risk Management Supervision).See also: Statement from Committee Chairman Tim Johnson (D-SD).