Simplifications to the Capital Rule Pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996
The American Bankers Association (ABA) appreciates the opportunity to comment on the Agencies’ proposal entitled “Simplifications to the Capital Rule Pursuant to the Economic Growth and Regulatory Paperwork Reduction Act of 1996” (Simplification Proposal).
ABA supports efforts to simplify and improve the current regulatory capital framework, and we appreciate this important step by the Agencies in this important process, positive both for better supervision and improved bank management. Over the last two decades, the regulatory capital framework has grown more complex than it needs to be for the financial stability or supervisory value it provides. ABA applauds the Agencies’ efforts to simplify the generally applicable riskbased capital standards to address unnecessary complexity and provisions that needlessly inhibit economic growth or constrain banks in fulfilling their core functions. We view the Simplification Proposal as an important first step to achieving a simpler and improved regulatory capital framework. We encourage the Agencies not only to continue these efforts when reviewing the generally applicable capital standards, but also to consider whether the advanced approaches and leverage ratio frameworks can be improved as recommended in ABA’s Capital White Paper, submitted to the Secretary of the Treasury in April 2017.
ABA further appreciates the Agencies’ dedication to informing the industry and public about the Simplification Proposal. The Community Bank Summary, Capital Simplification NPR Estimator Tool, and interactive teleconference hosted by the Agencies have helped facilitate informed comment. These steps, along with the EGRPRA outreach meetings, have made the regulatory capital simplification effort transparent and more likely to yield optimal results.
We offer our recommendations about how the Simplification Proposal and the generally applicable capital standards can be improved in the following three sections below.
This letter includes an Appendix outlining additional improvements to the generally applicable capital standards the Agencies should seek to implement.
