Growing Bipartisan Voices Underscore Economic Risks of Proposed Capital Requirements Rule

This week, bipartisan members from the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access, led by Chairman Dan Meuser and Ranking Member Greg Landsman, sent a letter to the Federal Reserve expressing concerns the capital regulation would have on small business lending and asked for an economic analysis on the proposed regulation. Ranking Member Greg Landsman said, "One of the biggest challenges facing small business owners in Southwest Ohio and across the country is access to affordable capital. This bipartisan effort will give our local entrepreneurs stronger opportunities for success." The Subcommittee requested the economic analysis focus on three key areas:

  1. "The potential effects of the Basel III Proposal on small business access to capital."
  2. "The specific impact on diverse-owned small businesses, considering the current high-interest-rate environment."
  3. "The consideration given to small business interests during the initial review phase of the proposal."

Rep. Andy Barr also weighed in with similar concerns about the capital plan, "What we have said to our colleagues is, 'This is a big deal—this is a really big deal for your constituents and for our economy. And if we don't watch it, if we get this wrong, we will put the economy into a recession.'"

As more voices continue to speak up on the impact increased capital will have on the economy,  now is not the time to increase banking capital requirementsThe largest U.S. banks are 'well capitalized,' according to the Fed's May 2023 financial stability report. The Fed's capital plan would increase borrowing costs for lower- and middle-income families and small businesses, disproportionately impacting historically underserved communities—creating another bill Americans can’t afford.