Griffin: Bill Protects Communities from Banking ‘Regulation Devastation’
WASHINGTON – Congressman Tim Griffin (AR-02) issued the following statement after introducing H.R. 1693:
“Community banks did not cause the financial crisis in 2008, but new regulations intended for global banks involved in international commerce could soon be applied to every bank in the nation, both large and small. It’s not fair to punish Arkansas families, farmers and startups for mistakes made by megabanks on Wall Street. That’s why I’ve introduced legislation to protect local communities and economies from this new one-size-fits-all regulation devastation.”
Largely in response to the financial crisis, in 2010, the Basel Committee on Banking Supervision produced a new international regulatory framework. Known as “Basel III,” these regulations would fundamentally change how banks calculate their regulatory capital requirements by increasing minimum levels of required capital, narrowing the definition of capital, and increasing the risk weighting of various assets, including residential mortgages. Basel III was conceived as being a standard for global banks involved in international commerce, yet in 2012, U.S. banking regulators announced a proposed rule that would apply the complex Basel III capital framework to every bank in the nation, both large and small, with significant disadvantages to the latter.
H.R. 1693 will protect community banks from Basel III’s overly complex and punitive risk weighting standards by exempting banks with under $50 billion in assets from these standards. It does not undermine the importance of strong capital requirements in the banking industry; it simply protects community banks from regulatory overkill that could have a devastating impact on local communities and rural areas. It also prevents further consolidation in a banking industry that has already become too-big-to-fail.
Community banks are engines of opportunity that generate economic growth and strengthen communities. There are almost 7,000 community banks throughout the United States, constituting 96.6 percent of all banks. Community banks are the primary source of lending for small businesses and farms.