Community Bankers Association of Illinois

A Growing Chorus of Concerns about Basel III and More in CBAI’s Basel III Resource Center - Now is the Time for All Community Bankers to Send Letters to Regulators!
October 9, 2012

CBAI is not alone in voicing significant concerns about the harmful impact of Basel III on community banks.

Cam Fine, President and CEO of the Independent Community Bankers of America (ICBA), stated, “Applying these stringent and overly complex rules on community banks is illogical because they did not contribute to the financial crisis. ICBA strongly supports a tiered approach that properly recognizes the differences between Main Street community banks and Wall Street megabanks.” (ICBA News Release 9/14/2012)

Thomas Hoenig, Director of the Federal Deposit Insurance Corporation, said of calculating the Basel III risk-weighted capital ratios, “it does so by using highly arcane formulas, suggesting more insight and accuracy than can possibly be achieved.” Hoenig went on to recommend that, “starting over offers the best possible opportunity to produce a better outcome.” (Back to Basics – A Better Alternative to Basel III Capital Rules, September 14, 2012)

The latest update to the International Monetary Fund’s Global Financial Stability Report finds that large banks with advantages of scale may be better able to absorb the costs of the [Basel III] regulations which would apply to all U.S. banks unless changed by policymakers. The IMF also wrote that new banking standards might encourage certain financial activities to move to the non-banking sector. (IMF October 2012)

In a letter to regulators regarding Basel III, a majority of the United States Senate cautioned, “We understand capital is an important source of strength in our financial system. However, the complexity of new global rules adds little value to the community institutions which your agencies rigorously regulate and monitor. As you review these proposed rules, we respectfully request you consider these unintended consequences and their effect on the viability of community banks across the country.” (American Banker September 27, 2012)

Finally, Greg Gonzales, Chairman of the Conference of State Bank Supervisors (CSBS), clearly and strongly stated their position on the proposed Basel III capital standards and risk-weights when he said, “An overly complex capital structure will only increase the cost to the industry, curtails credit availability, and drive industry consolidation. This is not in the economic best interests of the United States and it will be especially damaging to the economic prospects of local communities … across the country.” (Media Release of October 3, 2012)

CBAI urges all community bankers to become familiar with the proposed rules covering new capital requirements and asset risk weights. If implemented as proposed, these rules may endanger the existence of your community bank.

Your opportunity to inform the regulators about their impact on your bank and to help shape the rules will expire on October 22nd. Your voice must be heard! Now is the time to speak-up. Find CBAI’s comment letters and much more at CBAI’s Basel III Resource Center.
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