WASHINGTON— Federal banking regulators on Thursday formally launched what could become the biggest rewrite of U.S. bank capital rules in years, unveiling a package of proposals aimed at easing and recalibrating capital requirements across the industry—moves officials say should reduce aggregate required capital for banks of all sizes and free up more capacity for lending.
The Federal Reserve and FDIC both advanced the proposals at board meetings Thursday, while the OCC joined the interagency package, Law360 reported.
At the center of the package is a long-awaited rewrite of the U.S. “Basel III endgame” proposal for the largest banks, along with a broader companion proposal to make risk-based capital rules more risk-sensitive for smaller and midsize banks as well. Bloomberg reported the changes are designed to relax capital treatment for large lenders, while Law360 said regulators described the package as a comprehensive overhaul intended to finish the delayed Basel implementation and revise how risk-based capital is calculated more broadly.
Fed Vice Chair for Supervision Michelle Bowman had previewed the broad direction last week, saying the agencies wanted to eliminate overlapping requirements, better align capital with actual risk, and create “a more level regulatory playing field” between the largest banks and smaller institutions. In a March 11 speech, FDIC Acting Chairman Travis Hill similarly said the agencies were preparing two proposals—one to implement the 2017 Basel agreement in a more U.S.-tailored way for the largest banks, and a second to improve risk sensitivity for all non-CBLR banks, especially in residential mortgages, consumer lending and corporate lending.
The move marks a major shift from the tougher post-crisis capital push that had been building under prior regulators. Earlier previews reported by Bloomberg and Reuters indicated the revised framework would likely produce only a small net change—or slight decline—in capital requirements for the largest banks once paired with proposed reductions in G-SIB surcharges, rather than the sharper increases envisioned in earlier drafts. Industry groups have broadly welcomed the direction, while consumer advocates and some former regulators are expected to argue the rollback weakens safeguards put in place after the 2008 crisis and the 2023 regional bank failures.
Scott Simpson
ACU, DCUC Comment
“America’s Credit Unions has urged the NCUA to take a similar, tailored approach by recalibrating the capital treatment of mortgage servicing assets, including eliminating the current deduction threshold and adopting more risk-sensitive treatment for residential mortgage exposures. We have also called on the agency to evaluate broader capital relief options, including adjustments to elements of the risk-based capital framework, to ensure requirements better reflect actual risk and economic conditions," said America’s Credit Unions President and CEO Scott Simpson. "The Federal Credit Union Act requires a risk-based capital framework that is comparable to banking regulators, and today’s proposal reinforces the need for that framework to evolve alongside broader regulatory changes without imposing unnecessarily restrictive requirements on credit unions.
“Credit unions are a critical source of mortgage credit, particularly for low- and moderate-income borrowers. When capital rules are not calibrated to actual risk, they can limit the ability of credit unions to support homeownership and invest in their communities," continued Simpson. "We urge the NCUA to act to modernize its capital framework so credit unions can continue meeting the needs of their members while maintaining safety and soundness.”
Jason Stverak
The Defense Credit Union Council said it appreciates regulators taking a fresh look at capital requirements to ensure they support responsible lending and economic growth.
"As these changes move forward, it is important that credit unions are not left at a competitive disadvantage," stated DCUC Chief Advocacy Officer Jason Stverak. "We encourage the NCUA to evaluate where similar flexibility may be appropriate within the credit union system to maintain parity and ensure credit unions can continue meeting the needs of their members—especially servicemembers, veterans, and their families. Credit unions have a strong track record of safe, sound lending through all economic cycles. Ensuring a balanced regulatory framework will help preserve that strength while allowing credit unions to remain competitive and responsive in today’s evolving financial landscape.”
=================================================
Remember, you're not alone with NCOFCU.org
|
Comments
Post a Comment
Please no profanity or political comments.