Senate Republicans ask regulators to withdraw Basel III proposals

Senate Banking Committee Ranking Member Tim Scott and Republican committee colleagues sent a letter to the Federal Reserve and other regulators urging them to withdraw the final Basel III capital proposal, arguing that it could harm the economy and lack appropriate Cost-benefit analysis.

Bloomberg News

WASHINGTON — Senate Republicans, led by Sen. Tim Scott, R-S.C., ranking member of the Senate Banking Committee, wrote to banking regulators proposing Basel III capital rulesasking them to withdraw the proposal and start a new process.

Republicans and banking trade groups lobby heavily against Basel III The endgame proposal, largely thought to be spearheaded by Michael Barr, the Fed’s vice chairman for supervision, would impose additional capital requirements. The charge has so far been dominated by House Republicans in Congress, particularly Rep. Andy Barr – Ky., who leads the House Financial Services Subcommittee, repeatedly ask The Federal Reserve will release relevant economic cost-benefit analysis proposals.

Scott recently announced that he pause He sent the letter the day before he runs for the 2024 Republican presidential nomination. FDIC Chairman Martin Gruenberg, Acting Comptroller of the Currency Michael Hsu and Vice Chairman Barr will testify before Congress about its regular oversight. The Senate Banking Committee signed the letter, which echoed criticism from Rep. Barr.

“Ultimately, these substantial increases in capital did not prove to be supported by evidence, as the Fed, FDIC, and OCC failed to provide appropriate analysis or data to demonstrate their merits, particularly around the impact they would have on all sectors of the industry. “Indeed, we have heard widespread concern that Basel III will have negative impacts not only on affordable housing, but also on mortgages, small business loans, and consumer lending,” the Republicans said in the letter. Worry.」

Lawmakers said regulators Extend the comment period Because the proposal is not enough.

They said: “While we appreciate that the Federal Reserve, FDIC, and OCC extended the initial comment period and are now conducting data collection, the data collected is too little, too late. A thorough cost-benefit analysis is essential to ensure that our regulatory The regime is based on sound quantitative analysis, which should be carried out before the Basel III proposals are published.”

The wording of Republican complaints shows lawmakers Be prepared to challenge the rulemaking if they have the votes after the next electionAlthough challenges to the rulemaking process in the area of ​​bank supervision are rare, they do happenand often need to build a case to prove that regulators violated collusive intent, failed to give stakeholders sufficient time to comment or otherwise failed to follow procedures.

When it comes to Basel III rulemaking, Republicans have questioned what they say is a lack of a transparent process and have not received any economic analysis the Fed might produce of the rule’s impact.

“It is disappointing that the proposed rule is over 1,000 pages long and lacks any quantitative analysis to show that the rule is even necessary,” the lawmakers said in the letter. “While we have heard from Vice Chairman Barr for months Hear, the Fed conducted a comprehensive review of capital standards, the results of which were never publicly disclosed except for a speech by the vice chair summarizing the results.”

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