Federal Reserve Chairman Jerome Powell said today that he expects there will be “broad and material” changes to the proposed Basel III endgame capital standards before they are finalized, although he was unsure whether the Fed would repropose the rule to kick off a second round of public comment and analysis.
Powell appeared before the House Financial Services Committee for the first of two Fed reports to Congress this week. Questioned by committee Chairman Patrick McHenry (R-N.C.) about public comments from a broad range of interests expressing concern about the proposed standards, Powell said the Fed has just reached the stage where it can begin making decisions about how to proceed but not on the substance of the proposal itself.
“We do hear the concerns, and I do expect that there will be broad and material changes to the proposal,” Powell said. “I’ll add that I am confident that the final product will be one that has broad support both at the Fed and in the broader world.”
When asked if the Fed would repropose the rule if substantial changes are made, Powell said that was a “very plausible” option. “It will depend on how things lie at the time when we reach that point,” he said.
Fed will ‘carefully’ review input on debit interchange proposal
Powell said that the agency will “carefully” review all public comments it receives about its proposal to lower the cap on debit card interchange fees, with the comment period recently extended to May 12. Committee member Rep. Blaine Luetkemeyer (R-Mo.) questioned Powell about the potential for the rule change to harm low- to moderate-income individuals by making it more difficult for banks to provide affordable banking services. In response, Powell said the rule is still out for public comment, and that federal law requires the Fed to make a decision on the cap.
“This is the obligation that Congress has bestowed upon us, not something we sought, but that’s our obligation under the law,” Powell said. “And we don’t know what else to do than to keep doing it for as long as that’s our assignment.”
