[Congressional Record Volume 159, Number 38 (Friday, March 15, 2013)]
[Extensions of Remarks]
[Page E310]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                 THE BASEL III CAPITAL IMPACT STUDY ACT

                                 ______
                                 

                        HON. STEPHEN LEE FINCHER

                              of tennessee

                    in the house of representatives

                         Friday, March 15, 2013

  Mr. FINCHER. Mr. Speaker, I rise today to introduce the Basel III 
Capital Impact Study Act. This legislation requires the federal banking 
agencies to perform a thorough quantitative impact study (QIS) of the 
Basel III proposed rulemakings, taking into account the impact Dodd-
Frank provisions will have on financial institutions in the United 
States, and report their findings to the Senate Banking Committee and 
House Financial Services Committee. The bill would also amend the 
International Lending Supervision Act of 1983 (ILSA) by requiring the 
federal banking agencies to ensure that differences in rules that 
implement capital requirements do not give competitive advantages to 
any one group of financial institutions.
  The federal banking agencies have sufficient authority to perform a 
QIS for Basel III without Congressional action, but they have not 
conducted and publicly shared the results of any QIS specific to U.S 
financial institutions. I am introducing the Basel III Capital Impact 
Study Act because we need more information about the effects of Basel 
III implementation. In my district, banks of all sizes have come to me 
with serious concerns about Basel III. While I appreciate that we want 
all banks to be as financially sound as possible, we must also be 
cognizant of homebuyers, small businesses, and families who need loans. 
We need to let banks do what banks do best, loan money. I don't want to 
see implementation of Basel III curtail business lending and slow our 
already weak economy.
  Capital rules must be set in a manner that strikes the proper balance 
between safety and soundness and economic growth. The best way to 
determine whether such a balance is struck is to test new rules by 
examining the impact they will have on bank balance sheets and credit 
decisions prior to new capital rules taking effect. The QIS provides 
banking regulators with data that they can use to gauge the impact of 
proposed capital rules. This kind of pre-testing has been the model 
that was followed throughout the Basel process.
  In the case of Basel III, the new rules require more than 7,000 U.S. 
depository institutions to make changes to their capital for the first 
time since the original Basel I rules took effect in 1992. The only 
review of the new Basel III rules was conducted through a ``macro'' 
level analysis conducted by the Bank for International Settlements. 
There has been no individualized analysis conducted in the U.S. This is 
problematic because there are thousands of U.S. banks that vary in size 
and business models covered under Basel III. Additionally, the lack of 
domestic scrutiny of the proposal means unique characteristics of the 
U.S. lending market, such as housing finance, have not been closely 
examined. Finally, the Dodd-Frank Act made a number of significant 
changes that will affect the capital and risk taking activities of U.S. 
institutions. These changes were not considered as part of the 
``macro'' level review and should be factored in as part of some U.S. 
focused review of the new Basel III proposal.
  We must make sure that financial institutions in the United States 
can continue to lend and do business with American families before 
moving forward with the implementation of Basel III.

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