United States banking regulators do not expect proposed rules requiring financial institutions to hold more capital to take effect on January 1, as regulators work through a flood of industry comments on the proposals.
Reuters reported that regulators had received more than 2,000 comment letters since the rules were proposed in June to implement the international agreement on bank capital known as Basel III.
The agreement is considered one of the most critical reform efforts to make sure the global banking system is more resilient in the aftermath of the 2007-2009 financial crisis.
“We have received a large number of comments and want to closely consider each issue,” Federal Reserve Board Governor Elizabeth Duke told a group of community bankers on Friday.
The Fed, the Federal Deposit Insurance Corp and the Office of the Comptroller of the Currency said in a statement on Friday that tougher capital requirements would be delayed beyond January 1.
They did not indicate when they plan to finalize the proposed rules.
The delay adds to concerns that international agreements on financial reforms are fraying, as policymakers cope with strong industry pushback and disagreements with foreign counterparts about the best approach to reduce risk in the financial system without stifling economic growth.
Under the proposed rules, which were to be phased in over six years, banks would have to hold about three times more basic capital to protect against potential losses. The biggest banks would hold even more. The amount of reserve capital that banks must hold would be determined, in part, by the riskiness of their assets.
Banks have agreed that they need to hold more capital to guard against losses, but have criticized the particulars of the proposed rules.
Large banks say the rules go too far in forcing them to hold extra capital. Smaller banks have argued that extra costs to comply with the rules could hurt their ability to lend, stifling the U.S. economic recovery.
Many in the industry have said the rules, particularly the formulas used to determine how much capital to hold for riskier assets, are much too complicated. Some regulators have proposed exempting smaller banks from that portion of the rules, while others have suggested throwing out the rules entirely in favour of a simpler plan.
A bipartisan group of 53 lawmakers asked regulators in September to consider whether community banks should have to comply with the new standards.
Karen Petrou, managing partner of consulting firm Federal Financial Analytics, said observers expect community banks will have to hold more and higher-quality capital but not follow the same risk-weighting models larger banks will use.
Officials from the three bank regulators will appear before a U.S. Senate committee hearing next week focused on the impact of the proposed rules.
Industry groups also have said the January effective date would not give institutions, especially community banks, enough time to comply with the rules.
Regulators had already extended the comment deadline to give firms more time to determine how the requirements would impact their businesses.
“Even if they published the rule today, there’s no way they could give enough time for anybody to comply for a January 1 deadline,” said Wayne Abernathy, head of regulatory affairs at the American Bankers Association.
“Everybody’s recognizing that this is important stuff, you’ve got to take the time to get it right,” he said.
Implementation of the last set of Basel rules – Basel II – was plagued by delays, especially in the United States, and some observers have worried that the new rules could face the same obstacles.
Headlines Newsview all
Nigeria’s former oil minister Diezani Alison-Madueke is under investigation for allegedly trying to rig last year’s elections, a spokesman for the country’s anti-corruption agency said ...
Rate this article
- Tiwa Savage’s Husband Tunji 'Teebillz' Balogun Tries To Commit Suicide On The Lekki- Ikoyi Toll Bridge
- EFCC Arrests Nursing Mother, Others For Stealing Dead Man's N3.7m
- Federal Government Of Nigeria Owes Power Firms N213bn
Her Excellency Mrs Toyin Saraki looks adorable in the new photo released ahead of her Inaugural conference. Toyin Saraki Toyin Saraki, the Founder-Director of the Wellbeing Foundation ...
All roads lead to Milan tonight when Real Madrid welcome Manchester City to the Santiago Bernabeu stadium. While some have predicted an all Madrid final following Atletico triumph ...
Promoter Barry HearnAnthony has said Anthony Joshua could yet defend his International Boxing Federation world heavyweight title at Beijing’s Bird’s Nest Stadium. Hearn said he was ...
Veteran Yoruba actress, Fausat Balogun, popularly known as Madam Saje, in a recent interview with City People Magazine reveals why many marriages in Nollywood especially ...
Drake's money is fast becoming a music legend especially after making his Forbes music rich list debut on May 2. The Canadian rapper became the newest ...
The Nigeria Basket Ball Federation (NBBF) has released the list of 27 players invited to camp ahead of the 2016 Rio Olympics. President of the federation, ...
Dele Momodu has weighed in on the Tiwa Savage and TeeBillz marriage situation with prayers via a post on his Instagram page. The Ovation magazine publisher ...
Upcoming Nollywood actress, Genevieve Nene, is dead. Genevieve Nene According to an Instagram post by Nollywood director and screenwriter Ike Nnaebue, this morning, the actress died yesterday ...
– Pep Guardiola says his time at Bayern Munichis not a failure despite no Champions League trophy – The coach insists he has given his life to the ...