SIFMA today issued the following statement from president and CEO Kenneth E. Bentsen, Jr. on U.S. implementation of the Basel III Endgame, following a speech today from Federal Reserve Vice Chair for Supervision Michael Barr:
“As currently considered, the U.S. Basel III Endgame will significantly overhaul the current risk-based capital framework. We anticipate it will increase capital for banks’ trading activities by almost 60%. We fail to see the rationale for such an increase.
Given the market share of U.S. GSIBS in the U.S. capital markets, this could have a material impact on capital formation and risk management. Three-quarters of financing for non-financial corporations is raised via the U.S. capital markets. U.S. policymakers need to carefully consider the calibration of the Basel III Endgame to minimize the potential negative impacts it could have on businesses and consumers, the economy, and our global competitiveness.
Moreover, regulators should carefully consider how the Basel III Endgame will interact with other elements of the U.S. capital framework, in particular the ways in which the Global Market Shock (GMS) component of the stress testing framework and the Endgame’s trading book capital requirements effectively ‘double count’ similar sets of risks. We look forward to engaging with the Federal Reserve and other regulators on these important issues in the weeks and months to come.”
