Press Releases

Today, the House Financial Services Subcommittee on Financial Institutions, led by Chair Andy Barr (KY-06), held a hearing to examine the bank capital framework in the United States, evaluate how regulatory capital requirements influence financial institutions of all sizes and their customers, and promote the development of a more transparent, risk-aligned capital regime.

On How We Can Support Community Banks:

Chairman French Hill (AR-02) said, “The U.S. banking system is at a pivotal juncture right now. Regulators have the opportunity to establish credit and capital standards that strengthen financial security without unduly limiting economic growth or banks’ ability to compete on an international scale. Even so, small and community banks continue to face disproportionate compliance and capital burdens that were never intended for institutions of their size. … Thoughtful tailoring can free up capital for productive uses, helping banks support small businesses, homebuyers, and economic expansion across all of our districts.”

Subcommittee on Financial Institutions Chair Barr (KY-06) said, “We must ensure that community banks continue to serve as economic anchors in small towns and rural communities. We must keep U.S. institutions competitive on the global stage. And we must create a regulatory environment that supports—not strangles—growth, innovation, and opportunity.”

Rep. Young Kim (CA-40) said, “According to prudential regulators, around 85% of our community banks qualify for CBLR. Yet only 45% of them actually use it. That's why I introduced the Community Bank Lift Act that will modernize CBLR to ensure that more community banks in California are focused on consumers rather than regulatory red tape.”

On How Capital Changes Affect Small Businesses:

Rep. Bill Huizenga (MI-04) said, “What's often overlooked, from my perspective, is main street America. And that's really what I'm concerned about. You know, those small businesses that are the backbone of local communities that we all represent. I'm a small business owner myself, family is in construction. I've lived through the ups and the downs, and the downs are tough. We've had to rely on lines of credit. Recently, I actually ended my own line of credit because it was costing me while I wasn't actually accessing it. And, my business partner, my cousin, and I looked at each other and were like, well, this makes zero sense. So, we've got a lot of issues, as you can see, as it pertains to small businesses.”

Rep. Roger Wiliams (TX-25) said, “I’m a small business owner in the great state of Texas. I'm a car dealer. And the previous Basel III endgame proposal would have pushed capital standards well beyond what a strong and stable banking system requires. As Chairman of the Small Business Committee here in Congress, I'm concerned that the proposal would limit credit access for small businesses, especially given differing risk rates for loans to public versus nonpublic firms.”

Rep. Tim Moore (NC-14) said, “During the last Administration, banking regulators drifted away from their core statutory mission of protecting safety and soundness towards subjective judgments of political priorities. That shift has created uncertainty and imposed disproportionate burdens on the community and midsize institutions that drive credit formation. Now we finally have an opportunity to restore some regulatory discipline and return to a framework where requirements are truly risk based and proportional. We're working to revive this principle of regulatory tailoring because the requirements should match an institution's actual risk profile…”

On Capital Requirements Affecting Housing Affordability:

Subcommittee on Housing and Insurance Chair Mike Flood (NE-01) said, “… as Chairman of the Subcommittee on Housing and Insurance, I'm concerned that over calibrated capital requirements are limiting consumers access to affordable and reliable mortgages.”

Witnesses Echoed the Work of the Committee:

Mrs. Meg Tahyar, Head of Financial Institutions, David Polk & Wardwell LLP said, “Capital is complex and multi-layered. Capital regulation is long overdue for a rethinking, and this Subcommittee should be encouraging the federal banking regulators to move promptly to appropriately implement the Basel III Endgame. In the short time I have today, I would like to leave you with three thoughts. First, capital is very important but is not the only tool in the regulatory kit. Second, choices about the calibration of capital requirements and risk weights are political economy choices that involve credit engineering and can change the regulatory perimeter. Third, our economy and our banking sector are complex. Tailoring is the solution so that we do not treat large banks the same as community banks. At its core, capital is not only financial stability insurance but is also about competitiveness and credit in the real economy.”

Mrs. Amanda Eversole, President and Chief Executive Officer, Financial Services Forum said, “Regulators have begun to make important progress on reforming the large bank capital regime. The initial steps that regulators have taken on leverage capital and stress testing represent critical progress that is already making an important difference. We applaud these efforts and look forward to further progress by bank regulators to modernize the large bank capital framework. Specifically, regulators must finish the work to: 1) improve the transparency of the stress testing regime, 2) implement Basel 3 Endgame in a manner that improves rather than worsens competitive equity with our international competitors, 3) address the longstanding problems with the GSIB Capital Surcharge that creates further competitive inequities while limiting the ability of Forum members to support our domestic economy, and 4) continue adjusting leverage requirements, including the Tier 1 Leverage Ratio, so that they serve as a capital backstop for all banking organizations.”

Mr. Andrew Olmem, Managing Partner and Co-Leader of the Financial Services Group, Mayer Brown said, “… modernizing U.S. bank regulation is important for preserving the U.S.’s status as the world’s financial capital. The U.S. benefits greatly from being the jurisdiction in which every major financial institution wants to participate and invest. This investment provides valuable funding for the U.S. economy, helps support the U.S.’s $38 trillion federal debt, and keeps interest rates lower for American households and businesses. However, because capital can move faster than ever around the globe, the U.S. needs to be vigilant in ensuring that its financial regulatory system is considered by the marketplace as the safest, most sophisticated and technically advanced. Yet, the rising cost and complexity of U.S. regulation has made the U.S. a less attractive market. Modernizing bank regulation can help address some of these problems and improve the competitiveness of U.S. financial markets while maintaining the U.S.’s high regulatory standards.”

Mr. Mike Flood, Head of Center for Capital Markets Competitiveness, U.S. Chamber of Commerce said, “Bank capital requirements are not just a prudential regulatory issue—they are also economic and access-to-credit concerns for constituents, particularly small businesses, who receive a substantial majority of their financing from banks. … These businesses are the backbone of our economy, and their ability to access affordable credit is essential for growth, job creation, and innovation.”