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Forum CEO: Analysis Shows Excessive Cost of Capital Proposal
“The U.S. proposal will harm our economy and competitiveness”
Washington, D.C. – Financial Services Forum President and CEO Kevin Fromer issued the following statement today following comments by the Federal Reserve vice chair for supervision in which he discussed the banking agencies’ Basel 3 Endgame proposal, which would significantly hike capital requirements:
“This proposal would vastly and unjustifiably increase capital requirements, harming U.S. businesses, consumers, and the broad economy. Capital isn’t free. Higher capital requirements lead to increased costs and reduced availability of lending for consumers and businesses, with those impacts felt by all Americans.
“As the Forum and other banking trade organizations recently announced, capital requirements for the 8 U.S.-based Global Systemically Important Banks, or GSIBs, would increase by more than 30 percent, the combined effect of the proposed Basel 3 Endgame and increased GSIB capital surcharges, significantly higher than the agencies’ estimates.
“The U.S. proposal also departs from and exceeds the international Basel standards, further widening the disparity between U.S. and other large financial institutions. European banks subject to Basel 3 Endgame are expected to face increased requirements in the single digits.
“Numerous consumer groups, policy experts, and business organizations have argued that the proposal would harm consumers and businesses across the country and weaken American competitiveness at a time when policymakers are trying to avert a U.S. recession. These and other concerns should be addressed and the agencies should repropose this rule.”
Go to smartbankcapital.com to learn more about the strength and resiliency of the nation’s largest banks and the costs of higher capital requirements.
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The Financial Services Forum is an economic policy and advocacy organization whose members are the chief executive officers of 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, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.