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Opening Statement: Hearing on Basel III Implementation

January 11, 2013
Committee Remark

Chairwoman Capito and Chairwoman Biggert, thank you so much for holding this hearing this morning.

The recent near-collapse of our financial system taught us that capital is essential to fostering a more robust banking system – one that can both protect us from another crisis like the one we saw in 2008, and also ensure that lending to homeowners and small businesses continues even when we experience an economic downturn.

In response to the crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to put in place a number of reforms that will strengthen capital standards and prudential supervision, as well as achieve other goals.  At the same time, our federal banking regulators have worked to negotiate the Basel III accords, with the goal of strengthening and harmonizing international capital and leverage standards.

Given the complexity of all the reforms we are undertaking, I think it is important to hold this hearing this morning.  While I hope that we all support the goals of both the Wall Street Reform Act and Basel III, I think we need to pay close attention to the complexities of how these new rules are implemented.

In particular, I am concerned that the complexity of Basel III might disadvantage small and community banks, who do not have the resources to hire sophisticated compliance and technical experts that can help them navigate the rules.  I am particularly interested in how the proposed Basel rule would address the risk-weighting of mortgages, and how that might impact small and community banks' willingness to extend mortgage credit in our communities.

I look forward to hearing from the regulators here today about the feedback they've received on their proposal, as well as to hear the feedback from the industry and expert witnesses here today.  Thank you, I yield back.