Add former Federal Reserve officials Randal Quarles and Randall Kroszner to the growing list of stakeholders raising concerns about the negative impact of Basel III Endgame and encouraging regulators to carefully reconsider the entirety of the proposal. Coming on the heels of Fed Chair Powell testifying last month that "there will be broad material changes to the proposal," here's what they are saying:

• Randal Quarles, former Federal Reserve Vice Chair for Supervision, stated that the proposal should be reproposed. "I don't see how the rule can be sufficiently adjusted to be acceptable without it requiring reproposal under the Administrative Procedure Act." (Randal Quarles, The Federalist Society, 4/10/24)
  • "Now does that mean that it would be reproposed, or would they try to do something where they'd say, well, some portions of this we're going to go final on and other portions we will repropose? ... I think you have to look at the whole, so they should repropose the whole thing." (Randal Quarles, The Federalist Society, 4/10/24) 
• Randal Quarles argued that the proposal would disadvantage U.S. banks. "The proposal would create a very unlevel playing field, both between banks and nonbanks, and between U.S. banks and foreign banks … this will drive activity out of the well-supervised and well-regulated U.S. banking system into the weaker parts of the system … It is worse than a crime. It is a blunder. And finally, this is not the time. The Fed is trying to calibrate a slowing of inflation, which will necessarily involve a slowing of the economy because it is taking so long." (Randal Quarles, The Federalist Society, 4/10/24) 
• Randall Kroszner, former Federal Reserve Governor, warned that the proposal may impact banks' ability to provide loans and credit, shifting financial activity to nonbanks and diminishing the economic resiliency and vitality of the U.S. "As a result of the proposal, banks may reduce their activities or withdraw from providing critical products or services as they face nonbank competitors that are not subject to these regulations. Critically, this shift to nonbanks could have the unintended consequence of diminishing the financial stability and economic resiliency and vitality of the U.S." (Randall Kroszner, American Banker, 2/29/2024)

There is no doubt that Basel III Endgame will have negative consequences on borrowers, small businesses, and American consumers. It's time for regulators to scrap Basel III Endgame and start over.