I wanted to make sure you saw yesterday's coverage of the House Financial Services Committee hearing in American Banker, which underscores the lack of support for Basel III Endgame from key stakeholders. American Banker reports:

"Yellen refuses to back banking agencies' Basel play

Treasury Secretary Janet Yellen pointedly refused to take a position on the bank agencies' Basel III endgame proposal, a striking move amid an intense lobbying campaign from the country's largest banks and bipartisan pushback to the rule.

Yellen told several lawmakers, including House Financial Services Committee ranking member Rep. Maxine Waters, R-Calif., that she would leave the Basel questions to the bank regulators. The Basel III endgame proposal would raise capital standards for the largest banks, and has been the target of TV advertisements, many public letters from lawmakers and even veiled threats of a lawsuit as banks fight against the rulemaking.

Secretary Yellen also told Ranking Member Maxine Waters (D-CA) while under the financial stress of the pandemic,"...the banking system was strong and able to meet the credit needs of the country's businesses and households."

Additionally, during the hearing, both Democrats and Republicans continued to raise concerns about the impacts Basel III Endgame would have on everything from small businesses to consumer lending. American Banker reports:

"Lawmakers on both sides of the aisle criticized the Basel proposal during the hearing. In response to Rep. David Scott, D-Ga., who expressed concerns about potential small business and consumer lending impacts of the proposal, Yellen said she believes it's important that the country has a strong banking system with adequate capital, but she qualified that by acknowledging the nature of the largest criticisms against the proposal.

"It's important to ensure that credit availability is not significantly diminished," she said."

Rep. Bill Huizenga, R-Mich., chairman of the House Financial Services Oversight Subcommittee, pressed Yellen on her decision to avoid commenting on the specifics of Basel.
 
Yellen said that she gives her thoughts on a regular basis to the head of the banking agencies at the FDIC, OCC, and Fed. She said that she hasn't had a meeting with the president on the topic.

"I can't come to any conclusion other than you're sharing those insights with others, that you're not willing to share them with Congress," Huizenga said. "Which is your choice. I think it's a bad choice."

According to Secretary Yellen, banking regulators "...received many comments expressing concern about a number of different proposals that were embodied in the Basel III package," and that her "...understanding is that they believe that changes in some of the proposals are going to be appropriate and necessary to address the commenters."

Given the number of concerns raised about this proposal, there's only one thing regulators can do: go back to the drawing board.