CONTACT: Laura Peavey
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ICYMI: Forum CEO Emphasizes Need for Rational Review of Capital Rules
Washington, D.C. – Financial Services Forum President and CEO Amanda Eversole testified today before the House Financial Services Subcommittee on Financial Institutions on the need for a rational review of the current bank capital framework to support U.S. economic growth.
Eversole underscored that U.S. Global Systemically Important Banks (GSIBs) have tripled their capital to more than $1 trillion since 2008, and expressed appreciation for the approach by regulators, the administration, and Congress to ensure capital rules, like the so-called Basel III Endgame and GSIB surcharge, balance the costs to the economy with the benefits.
“There are consequences to more capital. It doesn’t come for free,” Eversole told lawmakers. “The prior proposal on the Basel III Endgame would have had a disproportionate impact on privately held companies, like small businesses across America, America’s farmers, America’s savers, America’s retirees. We need to get the proposal right and we look forward to the proposal that’s coming out.”
Following are other highlights from Eversole’s testimony:
Impact on Small Business
“My member companies have more than $100 billion in outstanding loans to small businesses today. And that’s really important because we know that small businesses are the economic engine for growth in this country. The Basel III Endgame as proposed in 2023 … would have impacted small businesses negatively through the form of higher capital. … We want to make sure that America’s small businesses are protected, but also can borrow money at a fair cost so they can get to the business of growing their businesses.”
American Competitiveness
“We pay twice the capital as a consequence of the GSIB surcharge … versus our international counterparts. And it really doesn’t have to be that way. That doesn’t drive additional safety and soundness to the system. It is in all of our interests to ensure that we have the safest, most liquid, most vibrant capital markets, and we serve our customers in the very best possible way. But gold plating just simply doesn’t make sense and we should revisit that.”
Impact to Farmers and Consumers
“I’m also from the great state of Georgia, so I, I deeply appreciate the concern about farmers here. The reality is it’s going to make it more expensive. … And it’s not just about the farmers, it’s about where those products go. They end up on store shelves. It also impacts the price of fuel when you think about biofuels and ethanol. And so we need to get this right.”
Impact on Housing and Migration of Risk
“In 2008, only 20 percent of mortgages were made outside of the banking system, and today more than 60 percent are made outside of the banking system. And when we think about risk, we know that America has a highly regulated, safe, sound banking system. And when we’re pushing things outside of the banking system, we should ask a question. The question is, ‘is this because of regulatory arbitrage or is this because of a good, sound competitive marketplace?’ So I think that’s point one. Point two is it’s time to see a Basel III Endgame proposal that gets this right, because there are costs to first-time home buyers.”
For more information on capital, please review the Forum’s fact sheet, information on Basel III Endgame, and other related content.
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The Financial Services Forum is an economic policy and advocacy organization whose members are the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, financial inclusion, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.
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