As Americans look to take their final trips of the summer, and U.S. athletes and fans return from a record-breaking Olympics, we should remember that the Basel III Endgame proposal threatens to increase costs for transportation in myriad ways, including air travel.

• The International Swaps and Derivatives Association (ISDA) and Securities Industry and Financial Markets Association (SIFMA) point out that the proposal's impact on airlines could mean higher costs or reduced services for consumers. "The Associations are concerned that the combination of increased CVA, market risk, and operational risk capital requirements would significantly impair the ability of corporates, insurance companies, and pension funds to hedge their business risks. If food producers and airlines, for example, experienced higher costs to hedge their exposures to changes in commodity prices, consumers, in turn, could face higher costs or less access to goods and services." (ISDA and SIFMA, Comment submitted to FDIC/Fed/OCC on Basel III endgame proposal, 1/16/24)
• The Commodity Markets Council and other energy market associations explain how the proposal will limit transportation providers' ability to manage price risk and volatility. "[H]edging strategies are employed by manufacturing and transportation companies that use derivatives to protect themselves from volatility in case power or fuel prices suddenly rise. Futures, options, and swaps are the building blocks for this type of risk management. They allow end users to manage price risk on a wide range of energy commodities, including crude oil, gasoline, heating oil, jet fuel, natural gas, and electricity." (Commodity Markets Council et al., Comment submitted to FDIC/Fed/OCC on Basel III endgame proposal, 12/11/23)
• The U.S. Chamber of Commerce Executive Vice President Tom Quaadman argues that the proposal's impact on derivatives would have negative consequences for all organizations that use derivatives to hedge nonfinancial business risk, including airlines. "The Proposal will also impact derivatives trading and, in turn, have negative consequences for American companies that use derivatives to safely hedge their nonfinancial business risk – including farmers, airlines, utility companies, and consumers. The Proposal would increase the cost and complexity for end-users to hedge their non-financial business risk. It is critical to ensure a robust and competitive derivatives market, as it is a key source of risk management, liquidity, and innovation for the economy. U.S. banks are among the largest and most active participants in the global derivatives market." (U.S. Chamber of Commerce Executive Vice President Tom Quaadman, Letter, 12/16/24)

Basel III Endgame needs to be reproposed, among many other reasons, because Americans can't afford the higher transportation costs that could come with the proposal as written.