Five trade groups said Thursday (June 18) that the federal banking agencies\u2019 Basel capital proposal released in March should be altered to eliminate areas of overcapitalization and better align capital charges with risk.<\/p>\n
The\u00a0Bank Policy Institute<\/a>, the\u00a0American Bankers Association<\/a>, the\u00a0Financial Services Forum<\/a>, the\u00a0U.S. Chamber of Commerce<\/a>\u00a0and the\u00a0Consumer Bankers Association<\/a>\u00a0said this in a Thursday\u00a0press release<\/a>\u00a0outlining the contents of a\u00a0comment letter<\/a>\u00a0they submitted in response to the Basel proposal.<\/p>\n The Basel proposal aims to standardize bank capital requirements. A 2023 proposal drew widespread opposition due in part to its high capital charges, and the March proposal is \u201ca significant improvement,\u201d the organizations said in the release.<\/p>\n \u201cHowever, some overlapping requirements remain, leading to excessive capital charges for certain risks,\u201d they said. \u201cOur recommended changes would further improve risk sensitivity and reduce unnecessary complexity, advancing the proposal\u2019s stated goals. The changes will ultimately benefit bank customers and the economy while promoting a sound banking system.\u201d<\/p>\n The trade groups\u2019 recommendations detailed in the letter include mitigating the overlap between the stress capital buffer and the proposal in terms of operational risk, revising the market risk and credit valuation adjustment frameworks to resolve the over-calibration for these risks resulting from that overlap, retaining the current definition of the terms \u201ccommitment\u201d and \u201cunconditionally cancelable,\u201d and reducing the risk weight for appropriately hedged mortgage servicing assets from 250% to 100%.<\/p>\n The groups also suggest in the letter that the implementation date for the proposal be no earlier than Jan. 1, 2028, while allowing banks to adopt it earlier.<\/p>\n PYMNTS reported in March that the federal banking regulators were seeking comment on proposals that would modify existing\u00a0capital requirements<\/a>\u00a0and implement the final components of the Basel III agreement. They said they would accept comments through June 18.<\/p>\n The\u00a0Federal Deposit Insurance Corporation<\/a>, the\u00a0Federal Reserve Board<\/a>\u00a0and the\u00a0Office of the Comptroller of the Currency<\/a>\u00a0said at the time in a press release that their proposals would \u201cmodestly\u201d reduce the capital requirements for both large banks and smaller banks but would keep the capital levels in the banking system \u201csubstantially higher\u201d than they were before the global financial crisis.<\/p>\n","protected":false},"excerpt":{"rendered":"Five trade groups said Thursday (June 18) that the federal banking agencies\u2019 Basel capital proposal released in March…\n","protected":false},"author":2,"featured_media":91409,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[8],"tags":[2009,77,1202,6603,14463,6605],"class_list":["post-91408","post","type-post","status-publish","format-standard","has-post-thumbnail","category-basel","tag-banking","tag-basel","tag-news","tag-pymnts-news","tag-regulations","tag-whats-hot"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ch\/116806751627127575","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/91408","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/comments?post=91408"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/91408\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media\/91409"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media?parent=91408"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/categories?post=91408"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/tags?post=91408"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}