In a comment letter on the interim final rule implementing the Basel III capital standards, ABA called on international bodies and federal regulators to exercise more accountability and transparency in developing future capital standards. For example, ABA said, the agencies should issue advance notices of proposed rulemaking for future Basel Committee proposals in order to solicit earlier feedback.
“Many community and midsize banks are frustrated with the United States’ participation in the Basel Committee,” ABA said. “These frustrations stem from the fact that even though Basel standards are held out to be designed and intended for large, internationally active banks, U.S. regulators are increasingly applying them to even the smallest banks.”
A more consultative approach would have improved the Basel III rule, ABA added. In its letter, ABA recommended several additional changes to the interim final rule, including equalizing treatment of S-corp and C-corp banks, increasing the mortgage servicing asset deduction threshold, grandfathering Basel I’s treatment of existing trust preferred securities, maintaining Basel I’s treatment of delinquent loans and allowing all banks to filter unrealized gains and losses.
Read the letter.