In an American Banker op-ed today, American Bankers Association EVP Wayne Abernathy questioned the effectiveness of the more than two dozen regulatory capital requirements that banks are subject to and highlighted the need for greater tailoring.
“The layering of additional capital requirements creates a complexity that at best provides the same information in differing ways,” Abernathy wrote. “At worst, it can too often obscure the most important data for regulators and bank management alike.”
Abernathy expressed support for reform efforts currently under way—such as those to make changes to the enhanced supplementary leverage ratio. These reforms would working to reduce the duplicative nature of the current regulatory capital framework and make supervision more efficient and effective, he noted. Meanwhile, a proposal to provide highly capitalized community banks an opt-out from the Basel III regulatory capital calculations “recognizes that Basel III standards were never a good fit for community banks.”