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Thursday, October 4, 2012

State Regulators Oppose Basel III Proposals

The Conference of State Bank Supervisors (CSBS) opposes the federal banking agencies’ proposals to implement the Basel III capital reforms, trade group Chairman Greg Gonzales said yesterday in a statement.
[W]e are opposed to the proposed approach … by the federal banking agencies to implement the Basel III capital accord and to incorporate a standardized approach for risk-weighted assets.

The proposed rules are highly reactionary to the most recent economic events and do not represent a thoughtful, long-term approach in the best interest of the U.S. banking system or the national economy.
Gonzales, also commissioner of the Tennessee Department of Financial Institutions, emphasized that the agencies have an obligation to provide empirical support for their recommended course of action, especially related to the risk-weights. He added that the standardized risk-weighted assets proposal also would present key challenges for mortgage lending.
We do not believe there is sufficient support for many of the specific risk-weights in the framework…

At a time when the government lacks a long-term solution to housing finance, the proposed framework would further stifle mortgage lending by traditional depository institutions.
When the CSBS files its comment letters later this month, the trade group will ask the agencies not to advance the Basel III proposals, and it will encourage them to seek a more meaningful and less complex capital framework, he said.

Read the CSBS statement.

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