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Congress
House Financial Services Leaders Advocate Tailored Basel III Approach
Regulators
should tailor proposed Basel III regulatory capital requirements to ensure they do not have a negative economic impact on community banks, House Financial Services Committee leaders told banking regulators. Financial Institutions and Consumer Credit Subcommittee Chairman Shelly Moore Capito (R-W.Va.) and Capital Markets and Government Sponsored Enterprises Ranking Member Carolyn Maloney (D-N.Y.) wrote that the Basel III standards were not designed for community banks, which did not contribute to the financial crisis.
Citing
a November joint subcommittee hearing in which ICBA testified on behalf of a Basel III exemption for financial institutions with consolidated assets of $50 billion or less, Capito and Maloney said they are concerned that requiring community banks to comply with Basel III will force many institutions to consolidate or go out of business. “These institutions did not cause the financial crisis—rather they have continued to serve their communities in a prudent manner, and in many cases have played a critical role in the recovery of local economies,” they wrote.
ICBA has repeatedly called on policymakers to exempt community banks from the Basel III proposal. At the Nov. 29 hearing, ICBA Chairman-Elect William A. Loving Jr. testified
that applying Basel III and the standardized approach to community banks would lead to further industry consolidation, leaving consumers with fewer options and less access to credit.
Further, Loving testified that imposing complex and excessive capital standards is not viable for community banks because they have extremely limited options for raising new capital, unlike their larger competitors. He also offered ICBA’s recommendations for simplifying the rule if community banks are not exempted.
ICBA continues to work closely with lawmakers and their staff to help ensure the Basel III rules do not harm community banks and their ability to lend. Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho) last week expressed their concerns with the potential impact of the proposed capital guidelines on community banks.
Regulators are expected to release Basel III final rules this year.
Credit Unions
ICBA Seeks Budget Report on Impact of CU Power Grab
ICBA called on the Congressional Budget Office and Joint Committee on Taxation to calculate revenue cost estimates of legislation to increase the statutory cap on credit union member business lending. In a letter to the offices and to congressional leaders,
ICBA noted that legislation recently introduced in the House (H.R. 688) would more than double the congressionally imposed cap from 12.25 percent of assets to 27.5 percent.
ICBA cited a 2010 CBO report that found that legislation to increase the cap to 25 percent would have an estimated revenue impact of $354 million over 10 years. The association wrote that new loans made by credit unions under the higher cap would displace loans made by taxpaying banks, which would reduce tax revenue to the government.
“Considering the focus on reducing the large federal budget deficit, we believe Congress should not act on this tax-exempt credit union industry expansion bill without understanding its full budgetary cost,” ICBA wrote.
ICBA
continues to strongly oppose the credit union power grab for community banks’ small-business customers. An ICBA-supported study released in November found that additional business-lending powers for tax-exempt credit unions would reduce tax revenues and pose new risks to the health of the credit union industry and financial system as a whole.
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Monetary Policy
FOMC Members Debate Asset Purchases: Minutes
The U.S. economy remained on a path of moderate growth, participants in the Federal Open Market Committee’s Jan. 29-30 meeting said. According to the meeting’s minutes, participants also debated the possible benefits and costs of additional asset purchases.
Most
said that the FOMC’s asset purchases had helped ease financial conditions and stimulate economic activity. However, many participants expressed concerns with the impact of asset purchases on ultimately withdrawing policy accommodation, on inflation, and on market behavior that could undermine financial stability. Several participants said the committee should be prepared to vary the pace of asset purchases.
Economy
January Housing Data Mixed
Housing
starts dropped 8.5 percent in January from the previous month but were up 23.6 percent from a year ago, the Commerce Department reported. Single-family housing starts were up 0.8 percent. Building permits were up 1.8 percent from December and 35.2 percent from January 2012, while single-family authorizations rose 1.9 percent.
Economy
Producer Prices Up in January
Producer prices rose a seasonally adjusted 0.2 percent in January, according to the
Labor Department. The increase was the first in four months. Prices declined 0.3 percent in December and 0.4 percent in November.
Regulation
FDIC Hosting Derivatives Conference in March
The FDIC announced it is hosting its 23rd Annual Derivatives, Securities and Risk Management Conference March 15-16 at the agency’s conference center in Arlington, Va. Registration can be done electronically
or by emailing nrose@fdic.gov. The registration deadline is Friday, March 8, and there is no registration fee.
Poll
This Week’s Quick Poll
Take this week’s Quick Poll on microlending programs, and view the results of the previous poll on the impact of new Federal Housing Administration rules on private mortgage insurance.
View the Archive.
Education
ICBA Compliance Institute in Nashville
ICBA is hosting its Compliance Institute April 14-19 in Nashville, Tenn., to meet the needs of both seasoned professionals and new compliance officers. For 2013, the program has been revised to incorporate the Consumer Financial Protection Bureau’s comprehensive compliance reforms in areas such as Regulations Z, X, B and E. Register Online.
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