The Independent Community Bankers of America expressed disappointment on Tuesday that the Federal Reserve “did not grant an outright exemption” from Basel III capital rules for institutions with less than $50 billion.
“ICBA appreciates that regulators scaled back some of the most harmful provisions of the Basel III rules that we opposed,” the ICBA said. “Allowing banks with less than $250 billion in assets to opt out of including accumulated other comprehensive income as part of regulatory capital, allowing banks to continue using the Basel I risk weights for residential mortgages, and allowing bank holding companies with assets under $15 billion to continue treating the proceeds of trust-preferred securities as Tier 1 capital consistent with the Collins Amendment of the Dodd-Frank Act will help preserve the community bank lending model.”
The Federal Reserve approved a final Basel III rule this week that exempts small and regional banks from several provisions related to new mortgage rules set to take effect beginning in January.
“Basel III was conceived to apply only to the largest and most complex international financial institutions, not community banks,” the ICBA said. “That is why ICBA has fought for an outright community bank exemption since regulators proposed the across-the-board capital rules more than a year ago. The association will continue to work with policymakers for additional common sense modifications to these international capital rules to ensure they do not weaken the financial system they were designed to preserve.”