In an eighth white paper to the Treasury Department today, ABA called for a reevaluation of the current global regulatory regime and for improvements that would make international standards more workable and supportive of economic growth, both domestically and abroad.
ABA noted that the current process for global standard setting lacks transparency and accountability, pointing as an example to the Basel rules that were developed with little public input. As a result, the implementing regulations in many cases “are inconsistent with U.S. economic and financial interests,” such as Basel’s Liquidity Coverage ratio, which is based on assumptions that have not historically held true for the U.S. market, and the Basel capital rules on mortgage servicing assets, which impose broad constraints on MSAs and have caused many banks to scale back their mortgage servicing operations, ABA said.
To promote greater transparency, ABA recommended that regulators publish advanced notices of proposed rulemaking before undertaking any international standard-setting project. The ANPRs should provide detail on specific issues or problems to be addressed by the international standards, the nature of the standards being considered for application in the U.S. or affecting U.S. citizens or businesses, the various options likely to be considered and the anticipated general impact of those options on U.S. citizens, businesses and the economy. Implementing regulations should be tailored to accommodate the diverse business models in the U.S. banking industry, ABA added.
In addition, ABA urged regulators to pause and conduct a careful review of all implementing regulations that resulted from global standard setting since the financial crisis to ensure that the rules are not standing in the way of economic growth. The association also called for a redesign of the international peer review program so that it focuses on the objectives of international standards, rather than compliance minutiae. For more information, contact ABA’s Wayne Abernathy.