Federal Reserve Chair Jerome Powell told Congress that regulators will likely make substantial updates to their proposed Basel III Endgame capital standards.
Details: Testifying at a House Financial Services Committee hearing, Powell said there would be “broad and material” changes to the proposal and that regulators might release an entirely new proposal. Committee Republicans urged regulators to withdraw the proposal ahead of the hearing, with Powell returning to Capitol Hill today to testify before the Senate Banking Committee.
Background: The agencies are proposing to apply an enhanced risk-based approach that standardizes risk weights for banking assets for banks with total consolidated assets of $100 billion or more. The proposal would require these institutions to run stricter risk-based capital calculations and would expand accumulated other comprehensive income requirements to the $100 billion asset level.
ICBA Comments: In a comment letter to regulators earlier this year, ICBA said it generally supports the proposal but cautioned regulators that more research is needed to avoid unintended consequences on community banks.