ABA, associations: Proposed capital requirements rulemaking violates law

Proposed capital requirements for larger banks rely on data and analyses that federal agencies have not made publicly available, which is in violation of the law, the American Bankers Association, Bank Policy Institute and four other trade groups said today in a letter to regulators. The groups also criticized the agencies’ stated goal of continuing to gather information on the effects of the rulemaking during the public comment period, saying such a strategy doesn’t give the public adequate time to weigh in on the data collected.

The FDIC, Federal Reserve and OCC in July proposed new capital requirements for banks with more than $100 billion in assets that would implement the so-called “Basel III endgame” standards. In their letter, the associations said the proposal violates the Administrative Procedure Act, which requires agencies to publicly disclose the data and analyses on which their rulemaking is based. That has not happened in the case of the capital requirements, which in many instances refer to information that has not been made public, the groups said.

In addition, they criticized the agencies’ plans to collect additional data “to refine estimates of the rule’s effects,” noting the purpose of the comment period is for the public to review the agency’s proposal, including any supporting evidence, and not for the agencies to finish doing work “that should have been completed before issuing the proposal.”

The agencies “must suspend the current open rulemaking, complete any data collection and analysis necessary to support their crafting and calibration of the rule, re-propose the rule in light of the additional analyses and data, and make that information available to the public and then allow commenters an opportunity to respond,” the associations said. “Any other approach would violate the agencies’ duty to identify and make available for public review and comment the technical studies and data on which any rule is based.”