Bank Policy Institute President and CEO Greg Baer is set to testify before the House Financial Services Committee’s Subcommittee on Financial Institutions and Monetary Policy. The hearing, titled “Rules Without Analysis: Federal Banking Proposals Under the Biden Administration,” will address concerns about the Basel capital proposal's impact on credit costs and U.S. capital markets.

Baer has expressed concern over the proposal, stating, “If adopted, the capital rule proposed by the federal banking agencies would have a profound effect on the availability and cost of credit for nearly every American business and consumer, as well as on the resiliency of U.S. capital markets. Given the stakes involved, the proposal is remarkable for its lack of analytical rigor, and its aversion to the use of relevant data.”

Earlier this month, BPI submitted two comment letters to federal banking agencies regarding their Basel capital proposal. These letters highlighted potential increases in banks’ capital requirements and borrowing costs for businesses and consumers. One letter addressed substantive issues with suggested remedies, while another pointed out legal problems with the proposal.

The proposed changes could affect products such as car loans, credit cards, small business loans, and mortgages by increasing costs and reducing availability. Baer criticized the lack of required analysis under the Administrative Procedure Act in formulating this proposal.

“The Basel proposal would impose significant costs on the U.S. economy, and there is insufficient economic justification for the rule in its 1,000-plus pages," Baer stated. He urged that "the agencies should re-propose the rule, conduct proper economic analysis and give the public a meaningful opportunity to respond to it.” Baer further emphasized his stance by saying, “We urge the agencies to withdraw this proposal, draft a new one, show their work, and seek public comment.”

The Bank Policy Institute represents leading banks in America including universal banks, regional banks, and major foreign banks operating in the United States.