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Friday, October 5, 2012

AR Lawmakers: Consider Unintended Basel III Consequences

The members of Arkansas’ congressional delegations asked the federal banking regulators to carefully consider the unintended consequences the proposed Basel III capital standards would have on the state’s community banks.

The new Basel III requirements “will narrow the types of capital banks can have while establishing higher capital ratios and risk weights for assets,” the Arkansas lawmakers said in a letter. They explained that such requirements will prevent banks in the state from deploying capital throughout their communities.
As a result, qualified families will struggle to gain financing for their first homes, and small businesses will have trouble getting much-needed lines of credit.
The lawmakers added that they understand the interconnectedness of the global financial system and the need for rules to govern it.
But we all believe that that the federal government should strike the appropriate balance in meeting its objectives. Asking banks in rural Arkansas to comply with standards intended for large institutions fails to achieve that balance.
Read the Arkansas delegation’s letter.

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