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Last update: 10/22/14

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ICBA Urges Congress to Retain Safeguards in New Risk-Based Capital Rules

Washington, D.C. (June 29, 2007)—The Independent Community Bankers of America (ICBA) urged Congress to oppose efforts to eliminate safeguards from the new Basel II risk-based capital adequacy rules for the largest banks.

"These safeguards are needed to ensure Basel II does not jeopardize the safety and soundness of our largest banks or the FDIC insurance fund and does not significantly alter the domestic competitive landscape for the industry," said Camden Fine, ICBA president and CEO in a letter to Congress. "It is a strength, not a weakness, to have strong capital standards and, therefore, strong, well-capitalized banking institutions."

ICBA urged Congress to support retaining all of the transitional safeguards in the final Basel II rules, including the 10 percent "transitional tripwire," and the leverage capital ratio.

In its letter, ICBA notes that community banks are concerned that they would be put at a competitive disadvantage if the new rules allow a few large banks to operate with very little capital, while the rest of the industry is required to hold a significantly larger percentage of capital against a range of assets (in particular, residential mortgages and retail and small business loans).

"The final rules should ensure the safety and soundness of our largest banks and equilibrium in our domestic competitive landscape so that community banks can continue to fulfill their important role in advancing economic growth and development in local communities across our nation," Fine said.

Read the complete letter at www.icba.org.

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