| WASHINGTON, April 16
WASHINGTON, April 16 Republican Senator Richard
Shelby introduced legislation on Tuesday that would force
regulators to study the economic impact before finalizing new
rules requiring lenders to hold more equity.
It is unclear how much bipartisan support Shelby will be
able to muster for the legislation, which could slow the
adoption of Basel III bank capital rules.
Shelby, a member of the influential Senate Banking
Committee, has argued that tighter capital rules could prove
damaging to the still tenuous economic recovery.
"Congress needs a detailed analysis of current and new
capital rules to ensure that taxpayers are protected without
unduly impeding bank lending or economic growth," Shelby said in
a statement on Tuesday.
A group of bank regulators - the Federal Reserve, the Office
of the Comptroller of the Currency and the Federal Deposit
Insurance Corporation - have each proposed rules to implement
the global Basel III capital accord in America.
Basel III forces banks to raise more shareholder capital to
fund their business, but it is under attack both from people who
think it is not enough to make the banks safe, as well as from
those who think it is too onerous.
Shelby said the proposed rules did not explain that Basel
III was calibrated appropriately for U.S. institutions and also
failed to explain what the impact on the U.S. banking system and
the overall economy was.
Some regulators have also been urging a rethink, with the
FDIC's Thomas Hoenig saying the rules should be ditched in favor
of a simpler approach, while Bank of England director Andrew
Haldane has said the rules are too complex.
Others, such as Benjamin Lawsky, head of the New York State
Department of Financial Services, want to spare community banks
from the most complex parts of the new rules.
Senators David Vitter, a Louisiana Republican, and Sherrod
Brown, an Ohio Democrat, are working on legislation that would
toss out Basel III and force the largest banks to hold up to
five times more capital.
Europe reached a deal on Basel III only last month and the
rules will not come into effect until January 2014, a year late.
Federal Reserve governor Daniel Tarullo has said the U.S. rules
will be fine-tuned rules later this year.
(Reporting by Douwe Miedema. Editing by Andre Grenon)