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
Fresh reports filtering in from Adamawa State has it that another set of 40 girls have been abducted by the outlawed Islamic sect, Boko Haram. The ...
Nigerian Dominic Adesanya Arrested After He Jumped the White House fence and ran onto the North Lawn
A Maryland man jumped the White House fence and ran onto the North Lawn before being subdued Wednesday night. Dominic Adesanya, 23, stood on the North ... Full story
Rate this article
Tuface Idibia has disclosed in an interview that getting married to Annie Macaulay was not easy and indescribable as he would have gotten injured if ...
It isn't easy to hold a marriage up to twenty years without any cause of alarm on controversy. Two days ago, on the 22nd of ...
Music artiste, Weird MC may have not released new songs in recent times but she has been more active on the social media and in ...
Veteran Nigerian Fuji artiste, Adewale Ayuba, in year 2011, once said on a National TV programme that Nigerian music will be at the bottom until ...
Smoking And Dropping The Picture On Social Media Is Inappropriate, Fans Blast Nigerian Rapper, Yung6ix
One of Nigeria’s silent young rapper, Yung6ix, is better known for his drinking habits both before going on set, during and after. But little is ...
Finally, the much awaited declaration of interest by President Goodluck Jonathan to seek for a second term in office has been finally laid to rest. ...
Handsome John Dumelo is the latest screen idol to set hearts racing amongst the Ghanaian and even Nigerian ladies. Following the frequent presence of the ...
Juliet Ibrahim is a Ghanaian actress and film producer turned singer.She is quite controversial in her own way, after divorcing her husband and father of ...
Nollywood actress, Tina Mba, has advised celebrities who are not prepared to stay married to stop giving excuses that are not valid.Speaking as a celebrity ...
Before now, there have been rumours going round that some politicians visit herbalists and make sacrifices just to elections. Though none of this has been ...