Joint Comments on the Request for Re-Proposal of Regulatory Capital Rule to Remedy Administrative Procedure Act Violations

Ladies and Gentlemen:

The Bank Policy Institute, the American Bankers Association, the Financial Services Forum, the Institute of International Bankers, the Securities Industry and Financial Markets Association and the U.S. Chamber of Commerce are writing with respect to the joint proposed rulemaking amending the capital requirements applicable to large banking organizations. The proposed regulations would significantly increase capital requirements for larger banks. Yet in support of these substantial new requirements, the proposed rule repeatedly relies on data and analyses that the agencies have not made available to the public. This reliance on non-public information violates clear requirements under the Administrative Procedure Act that agencies must publicly disclose the data and analyses on which their rulemaking is based. To remedy this violation, the agencies must make available the various types of missing material identified below—along with any and all other evidence and analyses the agencies relied on in proposing the rule—and re-propose the rule. To remain consistent with what the agencies themselves have determined to be an "appropriate" comment period, the agencies should provide for a new 120-day comment period in the re-proposal. Absent a formal re-proposal, and at a minimum, the agencies must extend the comment period to no sooner than 120 days after the date on which the agencies disclose all necessary information.

As part of the APA's notice-and-comment requirements, all agencies have the "duty to identify and make available technical studies and data that [they] ha[ve] employed in reaching the decisions to propose particular rules." Agencies "must explain the assumptions and methodology" underlying a proposed rule "and, if the methodology is challenged, must provide a complete analytic defense." And, where an agency omits some of the "critical factual material" and analyses from a proposed rule, it must disclose the material and then provide "further opportunity to comment." Indeed, "[a]n agency commits serious procedural error when it fails to reveal portions of the technical basis for a proposed rule in time to allow for meaningful commentary."

The proposed rule violates these basic legal obligations. Key elements of the proposed rule rely on a wide variety of data, analyses and methodologies that have been withheld from public view and comment.

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