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For Immediate Release
June 23, 2016
ABA Media Contact: Jeff Sigmund
(202) 663-5439
Follow us on Twitter: @ABABankers

ABA to Congress: Simplification of Rules Would Benefit Regulators, Banks and their Customers


​WASINGTON – Reducing the complexity of capital and liquidity rules would not only enhance bank supervision and management, but would also benefit bank customers, according to testimony from the American Bankers Association before the Senate Banking Committee.
Wayne Abernathy, ABA’s executive vice president for financial institutions policy and regulatory affairs, testified that “it is hard to overestimate the significance of getting capital and liquidity management right.”
“There are ways to reduce complexity for banks and supervisors that will result in improved application of the regulatory principles involved,” Abernathy said.  “We need to begin that conversation.  If not, we may find ourselves with a regulatory program that in practice is too complex to realize the supervisory success to which we all aspire.”
ABA offered four specific recommendations to regulators, including:
  • Highly capitalized banks should be recognized as already meeting Basel III capital standards without having to go through the complex Basel III calculations;

  • U.S. agencies should involve the public, Congress and affected industries through the publication of an Advance Notice of Proposed Rulemaking before starting international negotiations on financial standards;

  • Regulators should withdraw the proposed rules implementing the Basel NSFR liquidity regime, which have no purpose that isn’t already met by existing liquidity supervisory programs and tools; and

  • The treatment of trust preferred securities under Basel capital rules should hold existing TruPS issuances and investments harmless, which was Congress’ intent in the Dodd-Frank Act, and was followed by banking regulators implementing the Volcker Rule.
“We want to start a conversation about the rules that are more complex than they need to be to achieve their important prudential purposes, too complex for regulators and regulated alike,” Abernathy said.  “We believe that appropriate and well-considered simplification – with an eye always fixed on accomplishing the purposes of the prudential rules – can enhance both supervision and management.  Part of that simplification should include further tailoring of these regulations to the various business models of our very diverse banking industry.” 
Abernathy noted that Federal Reserve Chairman Yellen, in congressional testimony earlier this week, announced the Fed is conducting a similar review of stress testing.
For a copy of Abernathy’s full testimony, please click here.
The American Bankers Association is the voice of the nation’s $16 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $12 trillion in deposits and extend more than $8 trillion in loans.
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