This week, federal financial regulators testified before the House Financial Services Committee and the Senate Committee on Banking, Housing, and Urban Affairs. Among the many topics covered was Basel III Endgame and the impact the proposed rule would have on everyone from small business owners to first-time homebuyers.

Below are some notable comments from the hearings:

• Rep. Brad Sherman (D-CA) stated that as written, Basel III Endgame would put U.S. banks at a competitive disadvantage compared to their European competitors: "My concern … is that this overall approach, first it's being sold as if it's conforming with a European or international standard, but actually we're going to have much higher standards than Europe. That means less lending. […] There are many ways to raise money on Wall Street, but that local pizzeria can only raise money from the bank, and anything that makes that loan less likely to happen concerns me." (Hearing Entitled: Oversight of Prudential Regulators, House Financial Services Committee, 5/15/24) 
• Rep. Andy Barr (R-KY) noted that a significant amount of negative comments about the proposal came from outside of the banking sector: "Ninety-seven percent of the almost 400 comments on the Basel III Endgame proposal were opposed to or expressed concerns, with 86% of negative comments coming from outside the banking sector." (Hearing Entitled: Oversight of Prudential Regulators, House Financial Services Committee, 5/15/24)
• Rep. Roger Williams (R-TX) expressed concern about the impact the proposal would have on small businesses: "And this proposal will severely reduce financing and access to capital for small businesses, making it harder for them to secure funding to hire workers, maintain operations, and expand their operations. This could result in a domino effect stifling economic growth in local communities where these banks are often a driver of entrepreneurship." (Hearing Entitled: Oversight of Prudential Regulators, House Financial Services Committee, 5/15/24) 
• Sen. Tim Scott (R-SC) asserted that the only path forward for Basel III Endgame is to re-propose the rule: "I think the importance of Basel III being re-proposed—honestly, I think slicing it, dicing it, trying to figure out how to make some changes and put it back on the market—I think that's probably the wrong strategy, the wrong approach. From my perspective, it would be much better to have a full re-proposal, allowing people to have another window of opportunity to actually have input in the process of the changes." (Oversight of U.S. Financial Regulators: Accountability and Financial Stability, Senate Committee on Banking, Housing, and Urban Affairs, 5/16/24)
• Sen. Mark Warner (D-VA) argued that there needs to be evidence-based documentation on the impact of the rule: "I think the reason why there's been such pushback is that at least early on, there was not the kind of the evidence-based documentation of what would be the cumulative effect of these rules, these rule changes, particularly in terms of credit availability. So I hope before the final rules come out, you would make those estimates public." (Oversight of U.S. Financial Regulators: Accountability and Financial Stability, Senate Committee on Banking, Housing, and Urban Affairs, 5/16/24)

It's time to scrap Basel III Endgame and start over.