Regulators extend comment period for final Basel III proposals

The Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency have extended deadlines for comment on what they call the final proposal for Basel III.

Anna Roseliden/Bloomberg

Regulators have extended Comment period According to a recent joint proposal Modify capital requirements A process has been launched for large banks to gather more information on the potential impact of the changes.

Banks and other interested parties now have until January 16, 2024 to comply with the so-called Basel III final package Proposed by the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation. The extension extends the 120-day comment period, which was originally scheduled to end on Nov. 30, by more than six weeks.

The Fed also Data collection activities launched The information will allow banks to reveal information on their current capital levels and the makeup of their balance sheets on Friday. Institutions also have until January 16 to submit this information.

These moves come months after Bank resistance Their representatives, politicians and various other interest groups opposed the final proposal, which would revamp the risk capital standards that apply to all banks with at least $100 billion in total assets.

Opponents have raised various questions about the reform package, including concerns about specific provisions, such as raising Risk weights applied to certain mortgages — Broad opposition to additional regulatory capital obligations. Frequently asked questions also related to the length of the comment period and the lack of analytical detail on the impact of proposed changes.

The Bank Policy Institute, a lobby group representing major banks, said Friday’s announcement should be the first of several steps regulators would take to address “significant issues” in their capital proposals.

“Agencies should conduct a rigorous economic analysis of the cost of this proposal before, not during, the consultation period,” BPI President and CEO Greg Baer said in a statement. “Whether it’s good policymaking or legal compliance, They must also give the public sample time – 120 days – to analyze and comment on the impact study results after they are released.”

Bell also reiterated BPI’s call for agencies to re-propose rule changes after making changes.

When regulators issued a notice of the proposed rulemaking for the program, Michael Barr, the Fed’s vice chairman for supervision, said the central bank intended to “collect additional data to refine our estimate of the rule’s impact.”

The collection plan launched on Friday aims to generate relevant capital proposals as well as separate changes The surcharge applies to the country’s largest global systemically important banks.

“In particular, the Board seeks to assess the impact of the proposed revisions on risk-weighted assets and the potential impact of certain policy options,” the form reads. “These data will help the Board understand how various policy reform options may affect the banking organization.”

The form notes that banks are required to disclose information that has not been shared through public documents or disclosures. The Fed has vowed to maintain a certain degree of confidentiality at the bank level. Freedom of Information Act allows and only publish aggregated information “to protect the anonymity and confidentiality of the organization’s data.”

The form states that this information can be shared with the FDIC and OCC, but they are not allowed to use it in a regulatory environment.

Bank participation in data collection is voluntary.

In addition to outside calls for revisions to the proposal, several members of the Federal Reserve Board of Governors have also expressed concerns about reform, including Governors Michelle Bowman and Christopher Waller. who voted against publishing the proposal.

In a speech this month, Bowman talked about Gathering powerful research This comes before new policies are enacted, particularly those in response to a specific event such as the series of bank failures that occurred earlier this year.

“Before we undertake reforms designed to address the problems that led to bank failures, we need a complete understanding not only of these root causes, but also of the costs and unintended consequences of potential reforms,” ​​she said. Regulations that guard against overreaction, especially those that Supervision that is ineffective, calibrated and not tailored to address the real risks and challenges facing the banking system. “

Although Barr said the types of changes being considered in the final proposal could mitigate Why Silicon Valley Bank Failed Like other losers last spring, he emphasized that the capital changes being considered were an effort to finalize the U.S.’s adoption of international standards and complete the reform process. Initiated by the Dodd-Frank Act of 2010rather than a response to recent events.

Fed Vice Chairman Philip Jefferson also said he wants more information before committing to supporting the final proposal.

“I will evaluate any future proposed final rule on its merits. My view of any proposed final Basel III requirements for U.S. banking organizations will depend on the potential impact of implementation on banking industry resilience, financial stability, and the broader economy,” ” Jefferson said during a public meeting on the proposal in July. “I look forward to reading and digesting the comments we receive from the public, which will inform my future decisions on final approval of any final proposals.”

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