As international policymakers convene in D.C. for the IMF/World Bank Spring Meetings this week, there is a growing divide between the U.S. and Europe when it comes to the amount of capital banks are required to maintain. U.S. GSIBs are already subject to standards that are more stringent than the requirements of foreign jurisdictions such as the European Union and the United Kingdom.

While intended to even the playing field, Basel III Endgame, as proposed by U.S. regulators, goes far beyond what is being implemented by other jurisdictions and would harm the American economy, undermining the ability of U.S. companies to compete internationally. Here is what experts and policymakers are saying:

• U.S. manufacturers have argued that the proposal puts them at a competitive disadvantage internationally: "Subjecting U.S. banks to much higher capital requirements than their international peers would put U.S. manufacturers at a competitive disadvantage in the global marketplace. Lower capital requirements for foreign banks would give foreign manufacturers access to more cost-effective bank financing and hedging services, thus impairing the ability of U.S. manufacturers to compete on price, capture market share, and lead the world in innovation." (National Association of Manufacturers, Letter, 1/10/2024)
• Organizations representing the utilities industry noted that the proposal would undermine U.S. competitiveness: "The criteria for publicly traded companies included in the Proposed Rule is a far more restrictive capital requirement than that of the EU and U.K. capital frameworks, and places American banks—and their customers—at a material competitive disadvantage." (American Public Power Association & National Rural Electric Cooperative Association, Letter, 1/3/2024)
• A study by Oliver Wyman found that the proposal would significantly benefit European banks: "There is a potential for $35 billion in US bank revenues to be captured by other providers—a sum equal to 15% of the combined Americas wholesale banking revenue pool and U.S. wholesale banks' overseas revenues. We expect about half would go to non-US banks, particularly European banks given their existing scale and capabilities. The other half of the value migration will accrue to non-bank financial institutions (NBFIs) such as private credit funds and non-bank liquidity providers.'" (Oliver Wyman, "How European Wholesale Banks Can Seize The Moment," 2024)
• The Coalition for Derivatives End Users said the proposal would create an uneven playing field and would harm U.S. companies: "These aspects of the Proposals would create, if implemented substantially as proposed, an uneven playing field for large U.S. banking organizations vis-à-vis their U.S. non-bank competitors and their non-U.S., international bank competitors, thus impacting U.S. companies that rely on those U.S. banking organizations to manage their risks." (Coalition for Derivatives End Users, Letter, 1/16/2024)
• Rep. Andy Barr (R-KY) argued that Basel III Endgame will jeopardize U.S. financial institutions' global competitiveness: "And my job is to explain to America First [voters] why I'm fighting against excessive capital requirements on big banks. It's not because I'm trying to be a shill or protect big banks—it's because if Basel III Endgame goes into place, guess what? Access to affordable mortgages dries up, especially with high interest rates. You know, these America First voters need access to affordable lending. Right? And that goes away with Basel." (Claire Williams, "Q&A: Andy Barr pitches an 'America First' meets 'Chamber of Commerce' HFSC," American Banker, 4/16/2024)
• Sens. Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) explained that U.S. capital standards are already more stringent than other jurisdictions: "U.S. implementation of the Basel III capital standards are already more stringent than those of the European Union, including higher capital standards and mandatory stress testing on capital payouts. As a result, U.S. banks already hold more capital currently than the European banks will likely hold after they have completed Basel III Endgame implementation. This unaligned capital treatment would only increase after the full implementation of the U.S. proposal, with U.S. banks required to hold significantly more capital than their European counterparts." (Sens. Gillibrand and Lummis, Letter, 1/12/2024)

The sheer volume and diversity of voices make it clear—it's time for regulators to scrap Basel III Endgame and start over.