39 senators are calling on the Biden administration to withdraw the end of Basel III

39 senators are calling on the Biden administration to withdraw the end of Basel III

Washington DC–U.S. Senator Mike Crapo (R-Idaho) joined Senate Banking, Housing, and Urban Affairs Committee member Tim Scott (R-South Carolina) in sending a letter with 37 colleagues urging the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller OCC to withdraw Basel III endgame proposal. The committee is scheduled to hear testimony from financial regulators tomorrow, where Republicans will press regulators on several burdensome regulations that fail to take into account downstream impacts on ordinary Americans, including the Basel III endgame proposal.

In a letter to the Federal Reserve, the FDIC, and the OCC, the signatories argue that the proposal lacks adequate analysis or data to justify its merit, will result in more expensive and limited access to credit for Americans, and will negatively impact the U.S. economy. The letter also highlights the resilience of the well-capitalized US banking system, and the need to design changes in regulation based on demonstrable benefits and needs, not pre-determined agendas.

Every Republican member of the Senate Banking Committee signed the letter, including Mike Rounds (R-South Dakota), Thom Tillis (R-North Carolina), John Kennedy (R-Louisiana), and Bill Hagerty (R-Tenn.), and Cynthia Lummis (Republican). – Wyoming), J.D. Vance (R-Ohio), Katie Britt (R-Alabama), Kevin Cramer (R-North Dakota), and Steve Daines (R-Montana). Senators Mitch McConnell (R-Kentucky), Chuck Grassley (R-Iowa), John Cornyn (R-Texas), Lindsey Graham (R-South Carolina), John Thune (R-South Dakota), John Barrasso (R-S. Wyoming). Roger Wicker (R-Mississippi), James Risch (R-Idaho), Jerry Moran (R-Kansas), John Boozman (R-Arkansas), Mike Lee (R-Utah), Deb Fischer (R-Nebraska), and Shelley. Moore Capito (R-West Virginia), James Lankford (R-Oklahoma), Tom Cotton (R-Arkansas), Joni Ernst (R-Iowa), Dan Sullivan (R-Alaska), Todd Young (R-Indiana), Cindy Hyde-Smith (R-Mississippi), Marsha Blackburn (R-Tenn.), Mitt Romney (R-Utah), Mike Braun (R-Indiana), Roger Marshall (R-Kansas), Tommy Tuberville (R-Alabama), Marquin As The letter was signed by Mullen (R-Oklahoma), Ted Budd (R-North Carolina), Eric Schmidt (R-Missouri), and Pete Ricketts (R-Nebraska).

In the letter, the senators wrote, “Ultimately, these large capital increases have not been shown to be evidence-based, as the Federal Reserve, the FDIC, and the OCC have failed to provide adequate analysis or data to justify their benefits, particularly with respect to the costs they would impose in all Sectors of the United States Economy Indeed, we have heard widespread concerns about the negative impacts that Basel III would have not only on affordable housing, but also on large mortgage lending, small business lending, and consumer lending. In addition, it would limit of providing access to credit cards and home equity lines of credit. Equally worrying is that this proposal would ultimately place U.S. companies at a competitive disadvantage globally and could force U.S. companies to seek access to financial services from financial institutions abroad, Rather than those here at home. Moreover, this proposal disproportionately harms unlisted companies, which happen to be middle market, private entities, and millions of small businesses across the country. Each of these potential consequences may have significant consequences alone, but taken together, they constitute significant damage to various sectors of the economy, especially in the face of current economic headwinds and tightening credit conditions.

The senators continue “Although we appreciate that the Federal Reserve, FDIC, and OCC have extended the initial comment period and are now collecting data, it is too little, too late. A comprehensive analysis of costs and benefits is critical to ensuring that our regulatory system is based on an analysis of Sound quantitative and should be done well before the Basel III proposal is issued. As with all regulations, the burdens must be justified and must not outweigh the benefits… While we have heard for months from Vice Chairman Barr that the Federal Reserve was engaged in a comprehensive review of capital standards, the results of that review were never publicly disclosed except for the Vice Chairman’s letter summarizing the findings.

The senators concluded, “…Any proposed changes to our banking regulatory framework must be based on demonstrable benefits and needs, not on pre-determined agendas that will only harm the economy and consumers alike. Accordingly, we urge you to withdraw the Basel III endgame proposal as written and urge the Fed, FDIC, and SEC to act in a more transparent and justifiable manner.

To read the full message, click here.

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