The Federal Reserve should temporarily withdraw from international regulatory forums until key appointees of President Trump are in place, House Financial Services Committee Vice Chairman Patrick McHenry (R-N.C.) wrote to Fed Chairman Janet Yellen on Tuesday. He urged Yellen to hold off on continued participation in the Basel, Switzerland-based Financial Stability Board, Basel Committee on Banking Supervision and International Association of Insurance Supervisors until such participation is focused on achieving the Trump administration’s objectives.
“Despite the clear message delivered by President Donald Trump in prioritizing America’s interest in international negotiations, it appears that the Federal Reserve continues negotiating international regulatory standards for financial institutions among global bureaucrats in foreign lands without transparency, accountability or the authority to do so,” McHenry wrote. “This is unacceptable.”
McHenry also slammed the “secretive structures” of the Basel meetings. “Agreements like the Basel III accords were negotiated and agreed to by the Federal Reserve with little notice to the American public and were the result of an opaque decision-making process,” he said. “The international standards were then turned into domestic regulations that forced American firms of various sizes to substantially raise their capital requirements, leading to slower economic growth here in America.”
The American Bankers Association has long been concerned about the imposition in the United States of ill-suited global standards negotiated in Basel and has urged regulators to issue advance notices of proposed rulemaking before negotiations take place, allowing the U.S. public ample opportunity to contribute ideas and feedback before negotiations take place.