On Monday, Senators Tommy Tuberville (R-Alabama) and Katie Britt (R-Alabama) joined Senator Tim Scott (R-South Carolina) and 36 other Senators in a letter urging the Federal Reserve (Fed), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) to withdraw the Basel III Endgame capital rule proposal. Tuberville and colleagues warn that the over one-thousand-page proposed rule setting new capital requirements for borrowers would limit credit access for millions of Americans.
The Senate Banking Committee is set to hear testimony from the financial regulators on Tuesday, where Republicans will press the regulators on what they consider to be regulatory overreach that fails to consider downstream impacts on everyday Americans.
Tuberville wrote on X, “Biden’s bank capital rule will hurt main street by making it harder for Americans to get loans. The rule undermines economic growth and makes it harder for working folks to get ahead.”
“We have serious concerns that, as proposed, Basel III will restrict billions of dollars in capital from those who need it most, resulting in costlier and more limited access to credit for millions of Americans,” the letter states. “This would create severe, adverse impacts on the entire U.S. economy, from everyday American consumers to the small businesses that are the backbone of our economy.”
“Ultimately, these large increases in capital have not been shown to be evidentially based as the Federal Reserve, FDIC, and OCC have failed to provide proper analysis or data to justify their merits, particularly around the costs they will impose throughout all sectors of the economy,” the Senators wrote. “In fact, we have heard widespread concerns regarding the negative impacts that Basel III could have not only on affordable housing but on mortgage lending writ large, small business lending, and consumer lending. In addition, it would limit the availability of access to credit cards and home equity lines of credit.”
“This proposal will ultimately put U.S. companies at a competitive disadvantage globally and could force U.S. companies to search for access to financial services from abroad, rather than here at home,” the Senators continued. “Moreover, the proposal disproportionately harms companies that are not publicly listed, who happen to be middle market, private entities, and our millions of small businesses across the country. Each of these potential consequences would have major ramifications alone, but taken in totality, they pose significant harm throughout the economy, particularly in the face of current economic headwinds and tightening credit conditions.”
In their letter to the Fed, FDIC, and OCC, the signers argue the capital proposal lacks proper economic analysis and will result in costlier and more limited access to credit for Americans, hurting the U.S. economy.
The Senators concluded, “As American consumers continue to struggle with persistently high inflation, reduced access to affordable homeownership, and a slowing economy driven by the reckless spending of the Biden administration, any proposed changes to our bank regulatory framework must be based on demonstrable benefits and needs, not pre-determined agendas which will only serve to harm the economy and consumers alike. Accordingly, we urge you to withdraw the Basel III Endgame proposal as written and urge the Federal Reserve, the FDIC, and the OCC to operate in a more transparent and justified manner.”
The “Basel III endgame” is a proposal for stricter bank capital requirements aimed at ensuring the stability of big banks. Proponents believe that the proposal would modify large bank capital requirements to better reflect underlying risks and increase the consistency of how banks measure their risks. The changes would implement the final components of the Basel III agreement. The proposal would apply to banks with $100 billion in assets or more and to smaller firms with “significant” trading activities.
Senator Tuberville represents Alabama in the United States Senate and is a member of the Senate Armed Services, Agriculture, Veterans Affairs, and HELP Committees.
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