The Bank of England (BOE) last week announced significant revisions to its proposed bank capital rules to comply with Basel III Endgame. The BOE was concerned that requiring banks to maintain substantial amounts of additional capital could "make borrowing more expensive and less widely available, which in turn would also be bad for growth."
 

The result? Tier 1 capital requirements remained "virtually unchanged" for U.K. banks, which will see increases of less than 1 percent. That's a stark contrast to the Federal Reserve's anticipated revisions which would require U.S. banks to maintain much more capital. 
 

The difference will put America at a major competitive disadvantage and ultimately risks constraining the U.S. economy. 

• Treasury Secretary Janet Yellen made it clear Basel III Endgame was not intended to increase U.S. capital requirements when she was the chair of the Federal Reserve Board. "Our banking organizations are operating with very high capital standards, and this is mainly a matter of ensuring that other countries put into place appropriate capital regulation so that we have a level playing field." (Former Federal Reserve Chair Janet Yellen, Monetary Policy Report, 7/12/2017)
• Manufacturers say subjecting U.S. banks to "much higher capital requirements than their international peers" would put them at a competitive disadvantage internationally. "Subjecting U.S. banks to much higher capital requirements than their international peers would put U.S. manufacturers at a competitive disadvantage in the global marketplace. Lower capital requirements for foreign banks would give foreign manufacturers access to more cost-effective bank financing and hedging services, thus impairing the ability of U.S. manufacturers to compete on price, capture market share, and lead the world in innovation." (National Association of Manufacturers, Letter, 1/10/2024)

As U.S. regulators re-propose Basel III Endgame, it is crucial to ensure American banks and businesses can operate on a level playing field.