Scott Responds to Vice Chair Barr’s Remarks on Future of Basel III Endgame
Washington, D.C. – In response to Federal Reserve Board Vice Chair for Supervision Michael Barr’s comments today at the Brookings Institution on the future of the Basel III Endgame proposal, Ranking Member Tim Scott (R-S.C.) issued the following statement:
“For the last year, I have been consistent in my position that the Federal Reserve’s Basel III Endgame proposal will lead to higher costs and limited access to credit for hardworking Americans. Our financial regulators have yet to justify these changes and provide a comprehensive cost-benefit analysis. Today’s announcement only underscores that this proposal should be withdrawn and properly re-proposed in its entirety. I will be closely monitoring these developments and look forward to engaging with the financial regulators directly.”
BACKGROUND:
As the top Republican on the Senate Banking Committee, Ranking Member Scott has led Senate Republicans in opposing the controversial Basel III Endgame proposal. In a March 2023 letter, Banking Committee Republicans expressed their concern over the Federal Reserve’s “holistic” review of capital, and reminded Federal Reserve Chair Jerome Powell that capital requirements must be risk-based and tailored to an institution’s activity, size, and complexity.
In November 2023, Ranking Member Scott and 38 of his Republican colleagues urged the Federal Reserve (Fed), Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) to withdraw the Basel III Endgame proposal. In the letter, Senate Republicans argued the proposal lacks proper analysis or data to justify its merit, will result in costlier and more limited access to credit for Americans, and will negatively impact the U.S. economy. Ranking Member Scott and his colleagues also highlighted the resilience of the well-capitalized U.S. banking system, and the need for changes in regulation to be tailored and based on demonstrable benefits and needs, not pre-determined agendas.
In a December 2023 appearance on Squawk Box, Ranking Member Scott said, “The question is, you think about Basel III, the Endgame, how is a higher capital standard going to make our economy healthy or safer? The answer is – it does neither. Therefore, having more regulations will not actually make our economy healthier and it will not make our banks safer. So why would we go down a road of, what I consider, a nightmare of regulatory burdens that will restrict capital in the marketplace which means fewer loans for small businesses, fewer homes for first-time buyers and a strong challenge – headwinds – against the American Dream?”
In January 2024, Ranking Member Scott and every Banking Committee Republican continued their call for financial regulators to withdraw the Basel III Endgame proposal to raise bank capital requirements. In a letter to the Fed, the FDIC, and the OCC, Banking Republicans highlighted the agencies’ continued failure to provide a thorough economic analysis justifying the proposal’s merits and to address concerns on the proposal’s outsized impact on access to credit and important financial services for those who need it most.
In a March 2024 hearing, Ranking Member Scott reminded Chair Powell of the bipartisan opposition to the proposal from a diverse array of interests including community leaders, farmers, and housing groups.
At a hearing in July, Ranking Member Scott pushed Chair Powell to bring transparency to the rulemaking process and reiterated his calls for a re-proposal of Basel III Endgame. In response to questioning from the Ranking Member, Chair Powell indicated his belief that the Federal Reserve will need to put a revised Basel III Endgame proposal out for public comment.
###
Next Article Previous Article
