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Friday, December 4, 2015

Tarullo Hints at Basel III Relief for Smaller Banks

In remarks at the EGRPA outreach meeting in Arlington, Va., Federal Reserve Governor Daniel Tarullo pointed to the possibility of changing the Basel III capital calculations and reporting to minimize the burden on highly-capitalized community banks — as ABA has long advocated.

Tarullo said:
Many commenters have urged a change regarding the application of the Basel III capital requirements to community banks. I believe that it is possible to develop a simpler set of capital requirements for smaller banks that will be consistent both with the safety and soundness aims of prudential regulation and with our statutory obligations such as the Collins Amendment.

ABA and state bankers associations have strongly advocated with the prudential regulators for provisions exempting banks that are clearly highly capitalized from having to prove it via the complex and costly Basel III calculations.

In a letter to regulators last summer, the group said:
[These banks] should not have to go through the complex process under the implementing regulations that, in their case, would be superfluous in setting their capital requirements. We encourage you to proceed expeditiously with creating the proposed exemption regarding Basel III for highly capitalized banks.

The fourth and final request for comments on outdated and burdensome rules under the EGRPRA process is expected to be released this month.

Read more.

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