The Maryland, Louisiana and Wisconsin congressional delegations this week joined a rapidly growing list of lawmakers who have written to the federal banking regulators to express their concerns about the Basel III proposals harmful effects, particularly on community banks.
The Maryland lawmakers, led by House Minority Whip Steny Hoyer (D), said their state’s community banks told them the Basel III standardized approach’s requirement for higher capital and liquidity holdings for mortgage and small-business loans will mean there will be fewer and more costly such loans for state residents. “[W]e strongly encourage you to avoid needless complexity and consider the impact any new framework will have on traditional [banks] that provide credit to consumers and small businesses in our communities,” they said.
Louisiana’s lawmakers expressed concern that the Basel III proposals are overly complex, and could hurt smaller banks and thrifts. “We urged you to reject Basel’s overly complex risk-weighting capital system, and instead adopt a more simple, true, loss-absorbing capital system,” they said. “New capital rules should … distinguish between the size, risk and complexity of [banks] … to develop a more level playing field.”
Six members of the Wisconsin delegation also urged the regulators to carefully weigh the impact the Basel III proposals will have on small banks. “[W]e continue to worry that … [the proposals] overlay an unnecessary burden on community banks that may restrict [their] lending … discourage banks from purchasing and holding long-term assets like Treasury notes and municipal bonds, and promote consolidation of community banks without a corresponding benefit in the overall soundness of the banking system,” they said.
Read the Maryland lawmakers’ letter.
Read the Louisiana lawmakers’ letter.
Read the Wisconsin lawmakers’ letter.