As U.S. regulators consider whether and how to implement a wave of recently proposed revisions to Basel III’s risk-based regulatory capital requirements — often known collectively as “Basel IV” — ABA today urged the agencies to issue an advance notice of proposed rulemaking that would “[set] forth comprehensively and in detail the goals and concerns driving the cluster of proposed modifications… the various alternatives under consideration; and the potential effects of each alternative on different types of U.S. banking organizations and the delivery of banking services.”
Given the level of complexity and interconnectivity between these new capital proposals (which have thus far been released in a piecemeal fashion), ABA said that an ANPR would be the most effective, fair and transparent way for bankers to analyze and comment on the potential effects of the changes.
“We recognize that the array of changes being proposed by the Basel Committee, and the various alternatives under consideration in the United States, would be intended to produce simplification, transparency, compliance, certainty, and international harmonization benefits,” ABA said. “But our members also believe that, if crafted on a piecemeal basis, the alternatives could instead result in new complexity, a substantial increases in required capital unrelated to risk, significant competitive inequality, and new burdens on community banks.”
The association added that in moving forward with revising the U.S. regulatory capital framework, regulators should ensure that any changes to the framework would: produce capital requirements generally consistent with levels required domestically today; maintain an appropriate level of risk sensitivity; consider the overall capital level requirements relative to international standards; and not add unnecessary complexity. Regulators should also carefully consider the potential effects that the changes could have on community and midsize banks, ABA said.