Yesterday, a bipartisan group of members from the House Financial Services Committee sent a letter to bank regulators urging them to consider the wide-scale downstream impacts of the capital requirement rule on the U.S. economy.
 
Their concerns echo those of consumers, small businesses, advocacy organizations, and many others.
 
The bipartisan lawmakers' letter urges bank regulators to rethink the cumulative consequences of Basel III Endgame on critical market activities such as "securities underwriting, derivative hedging, securitization, and equity investments in funds," as well as operational risk requirements.
 
Key concerns include:

• Securities underwriting: The new rule would make securities underwriting—a critical strategy for businesses and local municipalities to finance growth and investment—less viable for banks. This would make it harder for U.S. companies to raise capital and for cities to make public investments in infrastructure.
• Derivatives hedging: By using derivatives to hedge against commodity price fluctuations, interest rate changes, and exchange rates, businesses can improve their planning and offer more stable prices for consumers. Basel III Endgame could threaten banks' ability to assist in hedging transactions.
• Asset securitization: Businesses and consumers rely on asset securitization from banks for affordable financing, including student loans, mortgages and credit card receivables. The proposed rule could reduce market liquidity and drive up costs for borrowers.

This letter provides further proof that regulators need to go back to the drawing board and rewrite this rule.