US bank lobby argues regulators must repropose sweeping capital plan
2023.09.12 11:26
By Pete Schroeder
WASHINGTON (Reuters) -A group of six major trade organizations representing the U.S. banking industry said on Tuesday they believe a recent sweeping proposal to hike bank capital requirements violates federal law due to insufficient analysis and must be redone.
In a letter sent to regulators, the group said the proposal in July to raise capital by 16% overall violates the Administrative Procedure Act because it lacked sufficient public data and analysis, and as a result it should be reproposed.
The group argued that banks cannot appropriately respond to the proposal put forward by the Federal Reserve, Federal Deposit Insurance Corp and Office of the Comptroller of the Currency without that analysis.
They also noted the agencies plan to continue collecting data while considering the proposal, which they contend is “legally improper,” and agencies should instead freeze work on the new rules until all the necessary data is collected, and issue a new proposal.
Barring a re-proposal, the agencies should restart the 120-day period for public comment once all the required data is made public, the groups said, as opposed to the current Nov. 30 deadline for feedback.
The request marks the latest in a broad and unusually aggressive effort by the banking industry to rebut the upcoming capital rules, which would require large banks to set aside billions more in capital to guard against risk.
The proposed rule, which would implement a 2017 agreement from the Basel Committee on Banking Supervision, aims to overhaul how banks gauge their level of risk, and in turn how much reserves they must keep as a cushion against losses.
“This is a rule of sweeping impact and it is not only essential for our members, but also in the national interest, that the new requirements be adopted only after the public has a meaningful opportunity to scrutinize both the proposal and the underlying rationale,” the group wrote in the letter.
Spokespeople for the Fed, FDIC and Office of the Comptroller of the Currency, which are considering the new requirements, did not respond to a request for comment.
The letter was signed by senior officials representing the American Bankers Association, the Bank Policy Institute, the Financial Services Forum, the Institute of International Bankers, and the Securities Industry and Financial Markets Association. It was also signed by the U.S. Chamber of Commerce, the nation’s biggest business lobby.
