In a letter to the FDIC, the American Bankers Association said on Tuesday that the FDIC’s interim final Basel III capital rule “does not create a regulatory capital framework that fits the U.S. banking industry and economy.”
The ABA warned that the rule could limit credit availability, hinder economic growth and hurt the competitiveness of the U.S. banking and financial sectors.
“ABA believes that the Interim Rule would have been better crafted and thus more effective and better matched to the U.S. financial sector if the process for developing international standards were more robust and transparent,” the ABA said. “Prior to negotiating international standards, and throughout the development process, the Agencies should more fully understand the implications for the U.S. banking sector and U.S. economy as a whole of the elements and concepts involved in the provisions under consideration.”
The ABA recommended that regulators issue an advance notice of proposed rulemaking at the same time the Basel Committee issues a consultative document, presenting to the public the scope and objectives of U.S. participation in discussions related to the document.
The ABA also recommended that regulators conduct an empirical study of the impact of the adoption of proposed international standards.
Additionally, the ABA noted frustration among community and mid-sized banks regarding the applicability of Basel rules to even the smallest institutions, though the rules were designed to apply to only the largest, internationally active banks.
“A better public process that specifically considers the impact on the entire U.S. banking community and its customers as well as on the economy would result in better rules that are less likely to be a bad fit for the U.S. economy and its diverse banking sector,” the ABA said.