Federal Reserve Chairman Jerome Powell said today that he expects the proposed Basel III endgame capital standards will be reopened to public comment once regulators agree to a course of action on how to proceed. Testifying before the Senate Banking Committee, Powell said federal regulators “have made quite a bit of progress” on changes to the original proposal since it was first put forward for public review last year. Now the question is one of process on how to proceed with a revised proposal, he added.
“It is the strongly held view of members of the [Fed] board that we do need to put out a revised proposal out for comment for some period,” Powell said. “The reason is when there are broad and material changes, that has been our practice. We don’t see a reason to deviate from the practice.… We’re working through that question with the FDIC and OCC. We haven’t reached agreement on that [with the other agencies], but I’m very hopeful that we will.”
The Fed last year opened the original proposal to public comment. An analysis by law firm Latham and Watkins found that 97% of public comments received either opposed the proposal or raised concerns, with many objectors coming from outside the financial sector. Lawmakers have called for the Fed to repropose the rule should regulators make broad and material changes to the document, which would subject it to another round of public review and analysis. Powell didn’t answer whether reopening the proposal to public comment would legally qualify as a reproposal.
“I don’t want to make the legal judgment,” he said. “I will just say again that from my standpoint—my view and the strongly held view of some of my colleagues on the board—is it will be appropriate for us to put out the changes again for a period of comment just because it is the right thing to do.”
