East Idaho Times

U.S. Senator Mike Crapo of Idaho and his Republican colleagues on the Senate Banking Committee have called on financial regulators to withdraw the Basel III Endgame proposal to raise bank capital requirements. In a letter addressed to Federal Reserve Chair Jerome Powell, Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg, and Acting Comptroller of the Currency Michael Hsu, the Senators expressed their concerns about the lack of a thorough economic analysis justifying the proposal's merits and its potential impact on access to credit.

The Senators emphasized that the agencies have failed to provide sufficient evidence that the banking system is currently undercapitalized. "Since we last wrote to you, our concerns have not been mitigated, and testimony from the Senate Banking Committee hearings has only deepened our resolve that this proposal is flawed and must be withdrawn," the Senators stated in their letter.

During the hearings, the CEOs of the eight largest banks in the country highlighted how the proposal would hinder economic growth and reduce lending to households and businesses. The Senators also noted the concerning testimonies about the negative impacts the proposal would have on minority communities, especially low- and moderate-income (LMI) and minority borrowers.

The Senators pointed out that the Federal Reserve's additional data collection in October 2023 indicated a lack of appropriate consideration for the impacts of the proposal. They questioned how legislators and the public could be expected to weigh in on a proposal when its authors themselves do not fully comprehend its effects. The Senators urged the regulators to operate in a more transparent and justified manner and to withdraw the Basel III Endgame proposal as written.

In conclusion, the Senators called for the regulators to reconsider the proposal and ensure that the public has an opportunity to provide input on the results of the data collection. "Accordingly, we once again urge you to withdraw the Basel III Endgame proposal as written and implore the Federal Reserve, the FDIC, and the OCC to operate in a more transparent and justified manner," the Senators concluded.

The full text of the letter can be found [here](insert link to letter).