HFS Vice Chair Calls for Risk-Sensitive Capital Rules to Support Lending

House Financial Services Committee Vice Chair Bill Huizenga argued that capital requirements must be calibrated to actual risk and must not restrict lending to ordinary Americans.

In remarks at a Committee oversight hearing on the latest capital proposals from the OCC, the FDIC, and the Federal Reserve Board (see previous coverage,) Mr. Huizenga said the revised proposals - covering Basel III, the standardized approach capital rule, and the surcharge applicable to global systemically important banks ("G-SIBs") - do more to ensure that banks continue their crucial work as intermediaries and that risks flow to those most able to manage them. The revisions responded to bipartisan criticism of a 2023 proposal that lawmakers argued imposed capital requirements disproportionate to actual risk.

Mr. Huizenga contended that the prior proposal's excessive capital requirements constrained bank lending and limited access to credit for home buyers and small businesses. He said the revised rules better preserve banks' capacity to function as intermediaries in securities underwriting, derivatives, and securitization markets. He noted the removal of elevated mortgage risk weights from the prior proposal as a key improvement that protected access to affordable home loans.