November 16, 2012 / 9:42 PM / 5 years ago

U.S. should consider simpler Basel rules for small banks: official

(Reuters) - U.S. regulators writing new rules requiring banks to hold more capital should consider issuing simpler requirements for community banks, a top Treasury Department official said on Friday.

Mary Miller, the department’s under secretary for domestic finance, said rules to implement the international Basel III agreement should take into account the roles small banks play in their communities through mortgage lending and other areas.

“In Treasury’s conversations with community banks and with our colleagues at the regulatory agencies, it has become clear that the standards established in Basel III may have different implications for different types of institutions,” Miller said in a speech at an international banking conference in Chicago.

“While we strongly believe that finalizing the regulations is critically important for certainty and planning, we also believe there are merits to considering alternative, simpler approaches to rules that apply to community banks.”

The Basel III capital agreement is considered one of the most critical reform efforts to make sure the global banking system is more resilient in the aftermath of the 2007-2009 financial crisis.

The Federal Reserve, Federal Deposit Insurance Corp and Office of the Comptroller of the Currency proposed rules in June to implement Basel III but have not yet put out a final version.

Regulators have told banks the rules will not take effect in January, as previously expected.

Community banks have argued that parts of the U.S. rules are much too complicated and that the extra costs to comply could stifle lending and wind up hurting the U.S. economic recovery.

Officials from the three bank agencies told a U.S. Senate panel on Wednesday that they expect to tweak the rules before finalizing them and that they will pay particular attention to feedback from community institutions.

Miller also said on Friday that U.S. bank regulators should be careful to coordinate with international regulators so that they do not issue discordant rules that make compliance difficult for banks.

Reporting By Emily Stephenson; Editing by Bernard Orr

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