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ICBA Raises Concerns with Proposed Capital Standards

Basel III Proposals Should Not Impose One-Size-Fits-All Approach

Washington, D.C. (June 12, 2012)—The Independent Community Bankers of America (ICBA) expressed its concerns with a joint proposed rule issued today that would extend stricter capital standards on Main Street community banks. The proposed rule issued by the Comptroller of the Currency, Federal Deposit Insurance Corp. and Federal Reserve would impose Basel III standards on banks of all sizes—not just on the large and complex financial institutions that caused the recent financial crisis.

“Basel III was originally conceived as an international standard that would apply only to the largest, internationally active banks. ICBA is concerned that the proposal would subject Main Street community banks to the same regulatory standards as the larger and more complex financial firms,” ICBA President and CEO Cam Fine said. “Community banks are common-sense lenders that stuck to their knitting in the run-up to the Wall Street financial crisis and have been working overtime to deal with the fallout. A one-size-fits-all regulatory approach threatens to stunt our nation’s economic recovery.”

The regulators’ proposed rules would increase capital requirements and impose more complex regulatory standards on all banks regardless of asset size. While community banks typically maintain the highest levels of capital in the banking industry, the more complex standards could limit lending and credit availability in Main Street communities. An approach that takes greater consideration of the size and complexity of financial institutions into account would have a less disruptive impact on the community banking industry.

ICBA will continue reviewing the proposed rules and their impact on community banks. The association looks forward to working with regulators on these proposals.

For more information, visit www.icba.org.