Many stakeholders have warned regulators that Basel III Endgame will negatively impact the economy. Based on a review of 13 research studies, the Financial Services Forum estimates that the proposed capital requirements would cost the economy over $100 billion per year.

Here's what economic experts, small business owners, and policymakers are saying about the economic impact of Basel III Endgame:

• Dr. Randall Kroszner, former Federal Reserve Governor, warned that if Basel III Endgame is finalized, many groups will be adversely affected and economic growth could suffer. "[Regulators] should undertake a cost-benefit analysis of the proposed revisions. Otherwise, some groups could be disproportionately adversely affected, and investment and therefore economic growth could suffer." (Dr Randall Kroszner, American Banker, 2/29/2024)
• The Coalition for Derivatives End Users noted the proposal would harm the American economy, including tempering job growth. "Imposing unnecessary regulation directly on end-users or indirectly, through their counterparties as these Proposals do, will create more economic instability, restrict job growth, decrease productive investment and hamper U.S. competitiveness in the global economy." (Coalition for Derivatives End Users, Letter, 1/16/2024)
• The Business Roundtable argued that higher capital requirements would stunt economic growth. "The negative effect of substantially higher capital requirements on economic growth would occur at an especially challenging time for the U.S. and global economy. For example, the Federal Reserve's most recent Senior Loan Officer Opinion Survey on Bank Lending Practices shows that banks reported tighter standards and weaker demand for commercial and industrial loans to firms of all sizes over the second quarter of 2023. By exacerbating the tightening standards and weaker demand for credit, the Proposal risks pushing the economy into a recession." (The Business Roundtable, Letter, 12/21/2023)
• Christopher Waller, Federal Reserve Governor, warned that Basel III Endgame could increase the cost of credit and raise costs for American families and businesses without "clear benefits" to the financial system. "I am concerned that [this] Basel III proposal will increase the cost of credit and impede market functioning without clear benefits to the resiliency of the financial system. […] This will raise costs for American families and businesses, which could harm many of them and hinder economic growth." (Federal Reserve Governor Christopher Waller, "Statement by Governor Christopher Waller," 7/27/2023)
• Karen Kerrigan, President and CEO of the Small Business & Entrepreneurship Council argued the needs of small businesses would be neglected if the proposal is finalized without changes. "The small businesses that drive the U.S. economy and local economies throughout our nation are being hung out to dry as regulators ignore the underlying causes of recent bank failures. Lawmakers cannot stand by and allow these harmful policies to get rammed through to completion. The costs and pain will burden millions of Americans, whereas only the few banks and executives who failed their depositors and investors should be paying the price." (Karen Kerrigan, President and CEO the Small Business & Entrepreneurship Council, as quoted in "Fed policies continue to batter small businesses," American Banker, 11/6/2023)
• Wisconsin State Rep. Francesca Hong (D-WI) states that tougher banking rules would hurt minority-owned small businesses that are trying to recover from the pandemic's economic impact. "Unfortunately, a proposal from the Federal Reserve aimed at increasing capital requirements for banks would do the opposite — ushering in regulations that would make it harder for small businesses to grow, especially minority-owned small businesses that bore the brunt of the pandemic's impact." (Wisconsin State Rep. Francesca Hong, "Rep. Francesca Hong: Tougher banking rules would hurt minority-owned small businesses," 11/1/2023)

One thing is certainly clear: Americans can't afford Basel III Endgame. Regulators need to scrap the proposal and start over.