Capital Requirements in Focus: What Experts are Saying

Last week, regulators unveiled an updated set of capital requirement proposals for financial institutions. As industry experts and news organizations digest the proposals, here is a round-up of what they are saying:

• CFTC Chairman Mike Selig: "I commend today's action by @FDICgov, @federalreserve and @USOCC to lower the onerous Basel III endgame bank capital requirements. The prior proposal disincentivized bank-affiliated brokers from servicing smaller customers. American farmers, ranchers and energy producers paid the price for this regulatory failure."
  
• Federal Reserve Vice Chair for Supervision Michelle Bowman: "This is just the first step of our ability to look into how we've set our asset thresholds so that we're tailoring our regulations and our supervision to ensure that we're capturing the risks that are unique to the different size, business model, and risk of each institution, and appropriately ensuring that they're safe and sound and in compliance with the rules and regulations."
  
• Federal Reserve Governor Christopher Waller: "We must balance the benefits of capital requirements against the costs to bank customers and to the real economy. I believe the proposals the Board is considering today achieve this balance by improving the risk sensitivity of our capital requirements while not unnecessarily increasing them."
  
• FDIC Chairman Travis Hill: "I support strong capital requirements, which I view as a critical tool to ensuring a safe and sound banking system. At the same time, calibrating capital requirements always involves balancing a number of competing objectives, including resiliency against unexpected shocks and driving economic growth."
  
• Wall Street Journal: "After scoring a victory with regulators, lenders are preparing to put billions of dollars in potentially freed-up capital to use. Their top priorities aren't complicated: make more loans, invest in their businesses, give money back to shareholders and strike deals."
  
• House Committee on Financial Services Chairman French Hill and Subcommittee on Financial Institutions Chairman Andy Barr: "The Committee applauds the Federal banking agencies' joint effort to incorporate bipartisan feedback from members of the Committee and develop a more balanced Basel III framework and accompanying capital rulemakings. Right-sizing bank regulation is critical to ensuring that capital standards are appropriately tailored to risk and do not impede lending at institutions that serve as the backbone of local economies."
  
• Senate Banking Committee Chairman Tim Scott: "I have long said that overly complicated capital rules can slow economic growth without making our financial system safer. This proposal is a step in the right direction. By unlocking capital in a responsible way, President Trump is helping to grow the American economy and expand access to credit."

Well-calibrated capital requirements are critical to both financial stability and the flow of consumer credit. The Ledger Project is glad to see regulators and commentators discussing the best ways to ensure households and businesses have access to affordable credit.

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