More specifically,
the Senators also ask the Fed to explain how it measured the impact on smaller
financial institutions as it developed the Basel III proposals. The Fed should
also explain how the added costs of the impending regulatory changes will be
justified by commensurate improvements in the safety and soundness of financial
institutions. Importantly, continued the Senators, the Fed should explain why
the Basel III and Dodd-Frank regulations are being imposed on smaller financial
institutions when the regulations are designed to protect the financial markets
from systemic risk.
Commentary and musings on the complex, fascinating and peculiar world that is securities regulation
Thursday, October 04, 2012
Senators Question Fed on Imposing Basel III and Dodd-Frank Regulations on Smaller Financial Institutions
In a letter to the
Federal Reserve Board, Senators James Inhofe (R-OK) and Tom Coburn (R-OK)
expressed concern that Basel III and Dodd-Frank Act regulations being crafted
for large global financial institutions are being imposed on financial
institutions of all sizes, including community banks. Changes in the definition
of capital and an increase in the risk weights of many asset classes will
squeeze financial institutions as their broader regulatory burdens are
increasing. The Senators ask if the Fed ultimately intends to exempt smaller
financial institutions from these regulations.