July 3 - The Independent Community Bankers of America has released this statement following the Federal Reserve Board’s vote approving final rules to implement Basel III regulatory capital standards.
“While ICBA continues to strongly support a general community bank exemption from the Basel III capital standards, we appreciate regulators’ efforts to provide targeted relief from the rule for these common-sense and highly capitalized institutions. A tiered approach that properly recognizes the difference between Main Street community banks and Wall Street megabanks is essential to ensuring these new standards do not stunt access to credit in communities across the nation.
“ICBA appreciates that regulators scaled back some of the most harmful provisions of the Basel III rules that we opposed. Allowing banks with less than $250 billion in assets to opt out of including accumulated other comprehensive income as part of regulatory capital, allowing banks to continue using the Basel I risk weights for residential mortgages, and allowing bank holding companies with assets under $15 billion to continue treating the proceeds of trust-preferred securities as Tier 1 capital consistent with the Collins Amendment of the Dodd-Frank Act will help preserve the community bank lending model.
“Nevertheless, ICBA is disappointed that regulators did not grant an outright exemption from the Basel III capital standards to all financial institutions with consolidated assets of $50 billion or less, as advocated by ICBA. The new capital conservation buffer and the new threshold limits on mortgage-servicing rights are examples of the obstacles that community banks will face with the new requirements.
“Basel III was conceived to apply only to the largest and most complex international financial institutions, not community banks. That is why ICBA has fought for an outright community bank exemption since regulators proposed the across-the-board capital rules more than a year ago. The association will continue to work with policymakers for additional common sense modifications to these international capital rules to ensure they do not weaken the financial system they were designed to preserve.”