Hagerty, Scott, Banking Committee Republicans Renew Push for Regulators to Abandon Basel III Endgame

January 18, 2024

WASHINGTON—United States Senator Bill Hagerty (R-TN), a member of the Senate Banking Committee, joined Senator Tim Scott (R-SC), Ranking Member of the Senate Banking Committee, along with every Republican on the Committee, in sending a letter to Federal Reserve Chair Jerome Powell, Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg, and Acting Comptroller of the Currency Michael Hsu calling for financial regulators to withdraw the Basel III Endgame proposal to raise bank capital requirements.

As the public comment period for the proposed rule closed, the Senators 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.

“As we noted in our November 12, 2023, letter to each of you, your agencies have still yet to justify the need for this proposal with any sufficient economic analysis or proof that the banking system is currently under capitalized,” the Senators wrote. “Since we last wrote to you, our concerns have not been mitigated, and testimony from the November 14 and December 6, 2023, Senate Banking Committee hearings has only deepened our resolve that this proposal is flawed and must be withdrawn.”

“Following the November 14 hearing, on December 6, 2023, we heard testimony from the CEOs of the eight largest banks in this nation, which largely discussed how the proposal would hinder economic growth and reduce lending to households and businesses,” the Senators continued. “During that hearing and since, we continue to hear particularly concerning testimonies about the outsized negative impacts the proposal would have on minority communities, especially LMI and minority borrowers.”

“As backdrop to all of this, the Federal Reserve seemingly acknowledged that it did not appropriately consider the impacts of the proposal when it began an additional data collection in October 2023…How can we as legislators, or any of the American public, be asked to weigh in on a proposal, the effects of which the proposal’s authors do not yet fully comprehend?…Given that the public comment period for the proposal closed today, it is unclear how the public may be able to weigh in on the results of the data collection and whether adequate data will be released to allow for independent analysis… Accordingly, we once again urge you to withdraw the Basel III Endgame proposal as written and implore the Federal Reserve, the FDIC, and the OCC to operate in a more transparent and justified manner,” the Senators concluded.

A copy of the letter can be found here.