The impact of the proposed increases in capital requirements for banks continues to garner nationwide attention. Policymakers, third parties, and key stakeholders are warning of the potential negative consequences Washington's capital regulation plan will have on Americans' ability to run their small businesses, get a loan, or secure a mortgage.
 
Below is what people are saying:
 
Third Way urged financial regulators to consider how increased capital requirements might affect small and minority-owned businesses. "Lawmakers and regulators need to make sure that future reforms adequately balance stability with economic growth. Small business owners face numerous barriers to accessing capital and need more opportunities to thrive. As it considers comments on the new proposed capital requirements to keep our banking system safe, we urge the Federal Reserve and banking regulators to pay particular attention to credit access and affordability for small and minority-owned businesses." (Third Way, 11/13)
 
Sen. Jon Tester (D-MT) expressed concern about the impact of increased capital requirements. "I just want to make sure that consumers aren't unfairly hit with this." (Politico Morning Money, 11/10)
 
39 Republican Senators signed a letter urging the Federal Reserve, FDIC and OCC to withdraw the Basel III Endgame proposal. "We have serious concerns that, as proposed, Basel III will restrict billions of dollars in capital from those who need it most, resulting in costlier and more limited access to credit for millions of Americans. This would create severe, adverse impacts on the entire U.S. economy, from every day American consumers to the small businesses that are the backbone of our economy." (U.S. Senate Committee on Banking, Housing, and Urban Affairs, 11/12)
 
Lisa Rice, President and CEO of the National Fair Housing Alliance expressed concern about the impact Washington's capital regulation plan will have on consumers. "The proposed capital rule for example, I could see it literally squashing any efforts by lenders to stand up special purpose credit programs. So I am hoping that the federal regulators will take a deep look at that and really revamp the capital rules similar to what they did with the Community Reinvestment Act Rule." (National Housing Conference, 11/03)
 
Sen. Mark Warner (D-VA) warned that tightening capital restrictions could contribute to the perfect storm. "Sen. Mark Warner (D-Va.) told MM he worries that tougher capital standards, high interest rates and a shock to the commercial real estate market could combine to create 'the perfect storm.' 'Any one of those, on their own, could be dealt with. But the combination of the three could be that perfect storm,' he said." (Sen. Mark Warner, POLITICO, 9/14)
 
Michelle Bowman, member of the Federal Reserve Board of Governors, argued against proposed bank reforms, stating that they are disruptive and do not strengthen the financial system. "At a time when confidence in public institutions is waning, the Federal Reserve should strive to demonstrate beyond doubt that it executes its duties in an independent manner, focusing on its statutory obligations. I fear that many of these actions may fall short of this objective." (MarketWatch, 11/07)
 
Laurie Goodman, fellow and the founder of the Housing Finance Policy Center at the Urban Institute, and Jim Parrott, a nonresident fellow at the Urban Institute, highlight the negative impact on the mortgage market from the proposal. "The effort was intended to decrease systemic risk, but by focusing narrowly on the risk posed by banks, it would likely increase risk in the mortgage market." (Housing Wire, 11/07)
 
Representatives Greg Landsman (D-OH), Dan Meuser (R-PA), Mark Alford (D-VA), and Sharice L. Davids (D-KS) of the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access, expressed concerns about how Basel III Endgame capital requirements would affect small businesses. "As larger banks recalibrate their operational and lending models in response to these capital requirements, there's a real concern about the cascading impact this may have on smaller financial institutions, and consequently, on the small businesses they serve. Such a scenario would invariably alter the financial landscape, with potential consequences like a tightened credit environment and increased borrowing costs. It is imperative that small businesses have access to affordable credit to support their growth and recovery, especially as they continue to navigate the challenges posed by the ongoing economic environment." (House Committee on Small Business, 10/20)
 
Mario H. Lopez, President of The Hispanic Leadership Fund, warned that increasing capital requirements would disproportionately affect low-income borrowers. "This reduction in available credit could kick many Americans while they are down, increasing their credit utilization and potentially hurting their credit scores. In this way, the Biden administration's plan is harmful to individuals struggling to make ends meet." (American Banker, 10/04)
 
Center Forward identified the proposal for increased capital requirements as one of the major threats to the U.S. economy and American consumers. "In July of 2023, the Federal Reserve proposed rules that could set us back by making financial markets more costly and, ultimately, hurt Americans. Families, businesses and nonprofits all rely on financial markets to finance their efforts to build for the future. Higher financing costs mean our economy recovers more slowly – leaving more families struggling and facing higher bills. The new Federal Reserve rules will add to higher costs, hurt hard-working Americans and harm American competitiveness." (Center Forward, 10/23)
 
Sen. Jerry Moran (R-KS) warned regulators to consider the capital regulation plan's impact on farmers and consumers. "From a Kansas soybean farmer to some of the world's largest airlines, end users of derivatives will all be impacted by these proposed capital requirements. The proposals inadvertently harm both producers and consumers by raising the cost to responsibly hedge against risk. Ultimately, the use of these critical risk management tools should be made more accessible, not more expensive." (Sen. Jerry Moran, American Banker, 11/13)
 
These statements are part of a growing chorus calling for regulators to rethink Washington's capital regulation plan.