Barr Delivers Remarks at Hearing to Examine Basel Endgame and the Onslaught of Hurried Rulemaking Undertaken by the Administration

Barr Delivers Remarks at Hearing to Examine Basel Endgame and the Onslaught of Hurried Rulemaking Undertaken by the Administration

Washington, September 25, 2024 -

Today, the House Financial Services Subcommittee on Financial Institutions and Monetary Policy, led by Chairman Andy Barr (KY-06), is holding a hearing entitled "Regulatory Recipe for Economic Uncertainty: The Endless Basel Endgame and an Onslaught of Hurried Rulemaking Undertaken by the Administration."

Watch Chairman Barr's opening remarks here.

Read Chairman Barr's opening remarks as prepared for delivery:

"Today's hearing is on the Basel III Endgame proposal by the Federal Reserve, FDIC, and OCC, as well as the onslaught of recent significant regulations from those agencies.

"Before discussing details, I would like to point out that, while we may not agree on everything, there has been good work from both sides of the aisle in this Subcommittee monitoring and overseeing the agencies.

"The initial and shockingly under-analyzed July 2023 Basel III Endgame proposal was met with criticisms from across the ideological spectrum, and from a wide range of industries and interest groups.

"97% of the comments were negative, and 86% came from stakeholders outside of the banking system.

"The proposal was sold partly as a reaction to the March 2023 bank failures and turbulence from interest rate risks, yet the vast majority of the proposal had nothing to do with that risk.

"Members of the Financial Services Committee have expressed concerns about the July 2023 Basel III Endgame proposals' effects on mortgage markets, treatment of tax credits, treatment of various business models and financial products like derivatives, and much more.

"We did so to identify the detrimental impact the proposal would have on our constituents, including homebuyers, farmers and ranchers, smaller financial institutions, and consumers of financial services.

"Unfortunately, the future of the Endgame proposal is unclear and administrative procedures followed by the agencies continue to be clumsy at best and politicized at worst.

"The result has been lingering uncertainty about the future rules of the road for financial institutions and consumers of financial services.

"The latest we have heard was a recent speech by the Federal Reserve's Vice Chair for Supervision, Michael Barr, who said he would recommend new proposals that modify the July 2023 proposal.

"While some of the previewed changes are encouraging, Barr's speech suggests that considerable work still remains, particularly to the market risk component of the Endgame proposal.

"Vice Chair Barr's remarks sketched out limited hints of what may be coming, and he once again provided numbers without underlying details.

"He said he believes his new proposal has broad support on the Federal Reserve Board, though this will only become evident when there is a vote.

"Additionally, Vice Chair Barr said the new proposals would be voted on 'soon' at the Fed, but more than two weeks after his remarks, there is no indication of any such vote occurring.

"Further, he said that his latest recommended changes are a joint effort with his counterparts at the FDIC and the OCC, though that may only mean a joint effort with fellow Democrat-appointed officials.

"Instead of seeing progress after Mr. Barr's speech, there have been numerous reports of partisan horse trading among disgraced FDIC Chairman Gruenberg, CFPB Director Chopra, and others.

"Representative of such reports, without objection, I wish to enter a September 30^th Bloomberg article into the record.

"Partisanship at our regulatory agencies and fouls in administrative procedures continue to weigh on providers of financial services and American small businesses and families.

"Adding to the sweeping changes in the evolving Basel proposal, the agencies have proposed or finalized an onslaught of other significant rules and regulations, many of which have been partisan and sometimes lacking full support even from Democratic policymakers.

"Those include significant proposals on long-term debt, brokered deposits, bank mergers, executive compensation, and many, many more.

"The rush to push out as many partisan proposals and rules as possible before a national election is concerning, as it amplifies uncertainty and threatens independence of the FDIC, OCC, and the Federal Reserve as a whole.

"Also concerning is the recent aversion by Democrat-appointed regulators to performing even basic cost benefit analysis to understand the potential unintended consequences stemming from how their hasty rulemakings, combined, will affect our constituents.

"It is important for this Subcommittee to continue our work to ensure that regulators dutifully implement laws in the interests of our constituents, and not in pursuit of partisan political goals."

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