House Financial Services Committee Asks GAO to Evaluate Basis for Basel Proposal

House Financial Services Committee Chair Patrick McHenry (R-NC) and Subcommittee Chair Andy Barr (R-KY) asked GAO to evaluate the role played by each U.S. federal banking agency in developing proposed new capital standards consistent with the Basel Committee on Banking Supervision (a/k/a "Basel III Endgame").

In a Letter addressed to GAO Comptroller General Gene Dodaro, the legislators complained of Congress's lack of insight into the basis for a joint federal banking proposal which would "substantially" revise capital requirements for large banking organizations so as to be consistent with Basel III Endgame international capital standards (see previous coverage). The legislators requested, among other things, that GAO:

• include summaries of (i) each material proposal submitted by a federal banking agency to the Basel Committee in connection with implementing the Basel III Endgame and (ii) issues raised by federal banking agencies regarding any proposals considered by the Basel Committee; and
• prioritize each U.S. Endgame concern or Basel Committee response relating to
  • (i) the rationale for corporate entities being required to have securities outstanding on a recognized securities exchange in order to be eligible for reduced risk weight for investment-grade corporate exposures; and
  • (ii) the rationale for not finalizing the tailored approach for high-fee banks that had been contemplated by the last Basel Committee.