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Friday, October 19, 2012

PA Lawmakers: Proposals Ignore Community Banks' Unique Role

Thirteen members of the Pennsylvania congressional delegation also expressed their concerns to regulators about the likelihood that the Basel III proposals would hurt community banks. In a letter the House members stated:
The proposed rulemaking does not consider the unique, important role that these institutions play in our financial system. By forcing [community banks] to greatly increase their Tier 1 capital reserves, the proposed rules significantly hamper their ability to manage liquidity and interest-rate risk.

[The Basel III proposals] could force community banks to retain a greater portion of their earnings in capital, rather than investing it in their communities for economic development and job creation.
The lawmakers also stressed that the proposals will increase their compliance burden, and could make it more difficult for smaller institutions to raise capital.

Read the letter.

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