At the American Bankers Association's Conference for Community Bankers today, Federal Reserve Governor Michelle Bowman stated that we do not fully comprehend the full impact of Basel III Endgame. She emphasized the importance of engaging with stakeholders to fully understand the unintended consequences of the proposed rule on community banks.
 
Here is what she said:

• When asked whether community banks should be worried about Basel III Endgame, Bowman noted that banks across the board should be concerned about the proposal: "I think all banks need to be concerned about this, because at the root of this proposal is undoing tailoring, which is a new statutory requirement that Congress imposed following the Dodd-Frank implementation of the regulations there. What they recognized is that some of these proposals were written at the same time. They sort of double-count in so many ways, and they dial up requirements at a level that is inappropriate for the complexity and size of many institutions, and where regulators take upon themselves to ignore these tailoring requirements. I think that there should be  concern across the board, not just for those that are immediately impacted by that; but it's not just the hundred billion and above."
• Bowman also stated that we do not fully understand the consequences of the proposed rule: "We still don't fully understand all of the different aspects of this 1,100 page, very complex rule that we really need to have a better understanding of."
• Bowman asked for an economic analysis of the final proposal's impact on the economy: "So, you know, in my mind, I think it would be helpful for us to have an economic analysis of whatever the final proposal might be, in addition to our quantitative impact study for the institutions themselves. It would be helpful to understand the implications on an economy that we have been working so hard to ensure—since COVID and before—is a functioning economy that employs people and continues to grow."

Bowman recognizes the negative consequences Basel III Endgame will have on community banks. This is just one of a long list of reasons why regulators need to go back to the drawing board on this misguided proposal.