Conference of State Bank Supervisors oppose Basel III capital reforms

Greg Gonzales

Conference of State Bank Supervisors Chairman Greg Gonzales said on Wednesday that the group opposes proposals to implement Basel III capital reforms.

“[W]e are opposed to the proposed approach…by the federal banking agencies to implement the Basel III capital accord and to incorporate a standardized approach for risk-weighted assets,” Gonzales said. “The proposed rules are highly reactionary to the most recent economic events and do not represent a thoughtful, long-term approach in the best interest of the U.S. banking system or the national economy.”

Gonzales, who is also the commissioner of the Tennessee Department of Financial Institutions, said that federal banking agencies are obligated to provide empirical support for their recommended course of action in relation to the risk-weights. Standardized risk-weights assets proposals, Gonzales said, would present key challenge for mortgage lending.

“We do not believe there is sufficient support for many of the specific risk-weights in the framework,” Gonzales said. “At a time when the government lacks a long-term solution to housing finance, the proposed framework would further stifle mortgage lending by traditional depository institutions.”

The trade group, in filing its comment letters later in the month, will ask agencies not to advance Basel III proposals and will instead encourage them to seek a more meaningful and less complex capital framework.

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