ACB: Press Releases

Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release August 1, 2003 #03-30
E-mail: [email protected]

ACB EXPRESSES CONCERNS OVER BASEL II PROPOSAL

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WASHINGTON, D.C. — America’s Community Bankers has expressed concerns about the effect on community banks of the Basel II capital accord proposal.

In comments to the Basel Committee on Banking Supervision and to the four U.S. banking regulators, ACB said it agrees with the accord’s approach in trying to more clearly link minimum capital requirements with an institution’s risk profile. But ACB said it continues to have “serious concerns” about the cost and complexity of the accord, the ability of institutions to understand and implement „Ÿ and supervisors to adequately administer and enforce „Ÿ the minimum capital requirements, and the accord’s potential to create competitive inequities.

ACB strongly recommended giving the Office of Thrift Supervision a formal role as a member of the Basel committee because it supervises 1,000 banking institutions with more than $1 trillion in assets, is a preeminent regulator of residential mortgage lenders, is skilled at assessing interest rate risk and is experienced in regulating diverse holding company structures.

ACB expressed concern that the accord will place smaller institutions at a competitive disadvantage with large banks that will use an internal ratings-based capital approach that can be expected to result in reduced capital requirements. ACB said the accord should not become effective until the competitive implications are further reviewed and understood.

ACB also cited implementation issues and said more examination needs to be made of the real-world consequences of adopting an extremely complicated capital regime. “Alternative approaches that do not represent such a radical departure from the existing regulatory capital framework should be considered,” ACB said.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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