ABA Seeks Pause on Basel Transition Period

The American Bankers Association today wrote to the heads of the federal regulatory agencies requesting that regulators pause the Basel III transition period until projected amendments to the risk-based capital standards can be promulgated.

The agencies earlier this year acknowledged in a joint Economic Growth and Regulatory Paperwork Reduction Act report that many of the Basel rules were “too complex given community banks’ size, risk profile, condition, and complexity,” and announced that they would propose amendments to simplify the regulatory capital treatment for mortgage servicing assets, timing difference deferred tax assets and holdings of regulatory capital instruments issued by financial institutions. These changes were echoed by the Treasury Department in its report on regulatory reform.

“[ABA] share[s] the view that regulatory capital standards are more complex than necessary for the intended prudential supervisory value,” the association said. “This is an appropriate time to consider the effectiveness of prudential supervision standards implemented in recent years, with a view toward how they can be improved.”