The Interviews - Experts Address Recent Fraud Headlines. This collection of interviews offers analysis of recent financial fraud events and cases.
Posted on 20th Nov 2012 @ 12:49 PM
The campaign of the Independent Community Bankers Association of America to spare small banks the worst of the proposed Basel III capital rules is making good progress, judging from recent events.
On November 9, federal banking regulators issued a joint statement acknowledging that they do not expect any of their pending proposed capital requirements to take effect Jan. 1, 2013. The agencies’ June proposals suggested the January effective date, but many industry participants have expressed concern that that date doesn’t give them sufficient time to understand the rule or to make necessary systems changes.
“In light of the volume of comments received and the wide range of views expressed during the comment period, the agencies do not expect that any of the proposed rules would become effective on January 1, 2013,” the Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency said in their statement.
“As members of the Basel Committee on Banking Supervision, the U.S. agencies take seriously our internationally agreed timing commitments regarding the implementation of Basel III and are working as expeditiously as possible to complete the rulemaking process,” the Fed, FDIC, and OCC said. “As with any rule, the agencies will take operational and other considerations into account when determining appropriate implementation dates and associated transition periods.”
A few days later at a Senate Banking Committee hearing, representatives of the agencies said they would strive to adopt capital rules that did not unnecessarily burden small banks.
Committee Chairman Tim Johnson (D-SD) also expressed his concern about the adverse effects on small banks. ““Specifically, with respect to community banks, I appreciate that your agencies have undertaken a number of efforts to explain the proposed rules to community banks, including issuing a capital estimation tool for banks to evaluate how the proposed rules will impact them,” Johnson said. “However, I am concerned that the proposed risk weights could have an adverse impact on small banks’ ability and willingness to offer mortgages, especially in rural areas. I look forward to hearing more”
In conjunction with the hearing, ICBA said the Basel III standards should not apply to U.S. financial institutions with consolidated assets of $50 billion or less. “Applying Basel III and the standardized approach to banks beneath this threshold will lead to large-scale consolidation in an industry already overly concentrated,” ICBA said.
It added, "If policymakers do not exempt community banks from the Basel III guidelines,” ICBA wrote, “they should simplify the rule and better align the proposed capital standards to the unique strengths and activities of community banks."
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