Nov 29 - Greg Gonzales, chairman of the Conference of State Bank Supervisors and Commissioner of the Tennessee Department of Financial Institutions, testified before Congress on the economic impact of federal proposed rules implementing the Basel III capital accords and a Standardized Approach for risk-weighted assets.
Testifying before a joint hearing of the Financial Institutions and Consumer Credit and Insurance, Housing, and Community Opportunity Subcommittees of the House Financial Services Committee, Gonzales told lawmakers the proposals are too complex, do not support economic recovery, and will inhibit banks’ ability to take prudent risk.
Gonzales made clear that state regulators support elevated and enhanced capital requirements, but said federal banking agencies should address these issues outside of the Basel III process and apply Basel III only to the largest internationally active banks, as intended by the international accord.
Gonzales also raised concerns about the lack of sufficient understanding regarding the impact the proposals will have on the type of credit available, the manner in which banks lend, and the full impact on the economy and job growth.
“It is in the best interest for the federal banking agencies to make significant changes to both the Basel III and Standardized Approach proposals,” Gonzales said. “We must ensure safety and soundness of the entities we regulate, but we must also provide a system of supervision that still allows these entities to serve their communities and achieve economic success,” Gonzales said.
Click here for Gonzales’ written testimony.