Powell Urges Re-Proposal of Basel III Endgame Plan

Federal Reserve Chair Jerome Powell emphasized the necessity of seeking additional feedback on the controversial Basel III Endgame proposal during a Senate Banking Committee hearing on Tuesday, according to a recent Reuters report. Powell stated that it is the "strongly held" view of the Fed board that further input is needed before finalizing the plan, which aims to overhaul how large banks assess risk and determine capital requirements.

The Basel III Endgame proposal, a joint effort by the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), has been a focal point of debate. While significant refinements have been made to the proposal, regulators are still deliberating whether to implement the rule immediately or to reopen it for public comment.

"My view, and the strongly held view of members of the board, is that we do need to put a revised proposal out for comment for some period," Powell said. "When there are broad material changes, that has been our practice."

This position reflects a divide among regulators, with the Fed favoring a reproposal and the FDIC and OCC reportedly against it. The latter agencies view additional feedback as a potential delay, particularly with a presidential election approaching.

Banks have strongly opposed the original proposal, arguing that increased capital requirements would impose undue burdens. They have been advocating for a reproposal, hoping for revisions that could mitigate the capital impact on larger institutions.

Powell did not specify a timeline for resolving this regulatory impasse but indicated that the process would not be expedited. "It will take some time," he noted, suggesting a thorough review period if a revised proposal is issued.

The outcome of this regulatory debate will have significant implications for the banking industry, as well as for the broader financial regulatory landscape.

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