Here are the facts: We already have an effective framework in place that requires regulators to sensibly tailor rules based on a bank’s risk profile and business model. Banks are already holding sufficient capital, as evidenced by the industry’s collective weathering of several significant events in recent years, from a global pandemic to a period of rapidly rising interest rates to resiliency in the face of the isolated bank failures in the spring. The proposed rules on the table would return our current framework to a one-size-fits-all approach that would put U.S. banks at a competitive disadvantage to their foreign peers. They have the potential to drive more business away from banks and into the less regulated shadow banking sector. They also fail to appropriately consider the potential economic consequences of forcing banks to hold even more capital in reserve. Bankers know there is a cost to holding too much capital — and it’s paid by both consumers and businesses who need credit. To ignore these realities would be a misstep, especially since history tells us that any capital increase for larger banks will eventually affect community banks as well. That’s why ABA has been so vocal in calling on regulators to conduct a thorough quantitative impact study to determine the full extent of potential economic consequences — which they agreed to do in mid-October, alongside an extension of the comment period. However, simply collecting the data is not enough. Regulators and the public need ample time to review and evaluate the data to understand the full picture — and the current timeline, even with the comment deadline extension, does not allow for that. Given the wide-ranging effect this rulemaking could have, the only appropriate course of action is for regulators to withdraw and repropose the rule after the data can be fully assessed. Changes to capital rules — even if they are only intended for the largest banks — will inevitably affect all parts of the banking system. This is too important to get wrong. Email Rob at nichols@aba.com. Changes to capital rules — even if they are only intended for the largest banks — will inevitably affect all parts of the banking system. LINCOLN BRUNING endacotttimmer.com 402-817-1000 Legal advice. Community banking experience. 11 Nebraska Banker
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