FOR IMMEDIATE RELEASE
ICBA Commends Senate Banking for Its Oversight of Basel Capital Accords
Washington, D.C. (November 10, 2005 - The Independent Community Bankers of America (ICBA) commends the Senate Banking, Housing and Urban Affairs Committee and Committee Chair Richard Shelby (R-Ala.) for holding oversight hearings on the development of new Basel capital accords and urges lawmakers to ensure U.S. bank regulators have a united position on Basel II when negotiating the new accord.
"ICBA remains concerned abut the competitive disparities between Basel I and Basel II as Basel II banks are expected to have lower capital charges for key categories of loans, and thus a pricing advantage over Basel I banks," said Karen Thomas, ICBA executive vice president for government relations in a statement to the Senate Banking Committee.
"While we commend the agencies for issuing a revised timetable that calls for implementing Basel II over a three year period beginning 2009 with limits on the amount that an institution's risk-based capital could decline, we recommend that the timetable and the issuance of a Basel II Notice of Proposed Rulemaking (NPR) be delayed until the U.S. regulators have completed their analysis of the latest Quantitative Impact Study (QIS4) and have come to a consensus concerning its competitive impact," Thomas added.
Because the elimination of the existing capital-to-assets leverage ratio could jeopardize the safety and soundness of our financial system, ICBA also strongly supports the banking agencies' intention to retain the leverage ratio once Basel II is adopted.
In its statement, ICBA said that it fully supports the regulators' current effort to revise Basel I to enhance its risk-sensitivity and address competitive equity concerns with a bifurcated framework. ICBA commends the recent issuance of an Advanced Notice of Proposed Rulemaking (ANPR) concerning a revised Basel I and supports the regulators' intention to have a concurrent timetable for the adoption of the two accords. To minimize regulatory burden for community banks, ICBA recommends that well-capitalized, well-managed community banks have the option to remain under the existing Basel I framework if they wish to do so.