Banks, Fed Governors critique Basel III rules ahead of deadline

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Banks, Fed Governors critique Basel III rules ahead of deadline
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WASHINGTON - As the deadline for public commentary on the Basel III rules draws near, top Federal Reserve Governors and banking industry representatives have voiced their concerns about the potential impact of the regulations on the financial sector. The Basel III framework, which primarily targets banks with over $100 billion in assets, has come under scrutiny for its stringent capital requirements and the implications these could have on bank lending practices.

Federal Reserve Governors Christopher Waller and Michelle Bowman are among the officials who have publicly opposed the current structure of the Basel III rules. Their criticisms are centered on the standardized risk-based capital charges and the operational risk framework, which they argue could be excessively burdensome for banks. The industry's apprehensions suggest that the rules, as they stand, might constrict the ability of financial institutions to support economic growth through lending.

The Basel III regulations, part of a global effort to strengthen bank capital standards following the financial crisis of 2007-2008, aim to improve the banking sector's ability to absorb shocks arising from financial and economic stress. However, the concerns raised by banks and Fed Governors indicate that the balance between resilience and lending capacity is a delicate one.

These discussions have not been limited to the Basel III rules alone. Other regulatory issues, such as debit card transaction fees and the Federal Reserve's quantitative tightening policy, have also been topics of conversation among industry and central bank officials.

As the period for public comment concludes, the Federal Reserve and other regulatory bodies will be tasked with reviewing the feedback and determining whether amendments to the Basel III framework are necessary to address the industry's concerns while maintaining the goals of the regulations.

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