Federal agencies, including the Federal Reserve, FDIC, and OCC, have expanded the deadline for accepting comments on new capital requirements.
The Federal Reserve, Federal Deposit Insurance Corp., and Office of the Comptroller of the Currency have extended the comment period for revamping capital requirements for banks with $100 billion or more in assets until January 16. This extension comes amidst growing criticism from lawmakers and banking trade groups regarding the proposal's transparency and details.
The proposal, which aims to increase the amount of capital U.S.-based global systemically important banks must hold, has been met with scrutiny due to the regulators' reliance on non-public information. Five banking-industry groups, including the American Bankers Association, Consumer Bankers Association, and Independent Bankers Association of Texas, have raised concerns about this practice. They argue that it violates clear requirements under the Administrative Procedure Act.
Rep. Bill Foster, D-IL, has emphasized the importance of details in the proposal, stating that they will have effects on lending activity, market behavior, and internal operations. He has also highlighted the complexity of the proposal and the need for maximum visibility into both the rules and the quantitative considerations leading to the final choices.
The proposal outlines that banks with between $250 billion and $1 trillion in assets face a roughly 10% uptick, while banks with $100 billion to $250 billion would see a 5% jump in capital holdings. However, the specific impact on smaller banks is not as clearly defined.
The Bank Policy Institute and five other trade groups have argued that collecting data during the comment period is legally improper. They suggest that the agencies could release data and analyses in anonymized or aggregated forms to address confidentiality concerns.
Criticism has also come from Rep. Patrick McHenry, R-NC, who has described the rule as "economically significant" but criticized its lack of a meaningful regulatory impact analysis, economic impact assessment, or cost-benefit analysis. He made these remarks in a September letter to regulators.
The extension of the comment period may indicate a response to these criticisms and the complexities of the proposal. As the comment period continues, it remains to be seen how the regulators will address these concerns and finalize the new capital requirements for large banks.
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