Problems With The Plan - ANOTHER BILL AMERICANS CAN’T AFFORD

Consumer & small business impact

U.S. economic impact

U.S. competitiveness

Banking's proven resilience

THE REAL COST OF
BASEL III ENDGAME:

UNDERSTANDINGWASHINGTON'S CAPITALREGULATION PLAN

Consumers will bear the brunt of Washington's proposal. Basel III Endgame will lead to higher costs across the board—for everything from electricity to food.

THE NEW CAPITAL REGULATION PLAN WILL HIT:

CONSUMERS:

Many businesses use banks and the capital markets to borrow, grow, and hedge risks, from utilities to airline companies. If these services are more expensive, consumers will end up paying more for necessary expenses like energy, groceries, and automobiles.

FARMERS:

Farmers use hedging to protect themselves against volatile prices. Higher capital costs would leave them with fewer options and make it harder for them to finance their operations, purchase equipment, or invest in their farms. This can cause a ripple effect on an already vulnerable industry—hurting local economies, agricultural suppliers, and food processors. These increased costs will be passed onto consumers buying groceries.

BUSINESSES

SEEKING

TO GROW:

Entrepreneurs with businesses of all sizes rely on loans to run their operations, make payroll, and contribute to their local economy. Without reliable access to credit, they become more vulnerable and less likely to hire new workers or expand their footprint.

AMERICANS

BUILDING

NEST EGGS:

Workers saving for retirement, families socking away money to buy a home, and investors trying to build long-term savings will likely see higher costs and reduced returns without major changes to Basel III Endgame.

Federal regulators' proposal

will drive these individuals towards costlier and riskier methods of capital acquisition, such as the shadow banks.

It will hurt the economy at a time of high inflation.

Higher capital requirements prevent banks from having more funding available to lend to consumers, making it harder for consumers to buy houses, cars, or make appliance repairs—all of which will slow the economy at a time when inflation continues to remain high.

$100
billion

A substantial increase in capital requirements could raise annual borrowing costs. This would cost the economy over $100 billion annually and result in more lending by shadow banks.

$1
TRILLION

The Peterson Institute found that raising capital requirements by two percentage points would decrease the U.S. GDP by $1 trillion over 30 years.

It will put foreignbusinesses aheadof U.S. businesses.

Washington's capital regulation plan far exceeds the international accord struck in Basel, Switzerland. No other jurisdiction plans to raise requirements as proposed in Washington's capital regulation plan.

Large U.S. banks already have stricter capital requirements, meaning they must maintain more capital than their European competitors. This puts American businesses, who rely on U.S. banks, at a disadvantage.

U.S. banks haveproven resilient throughunprecedented economic disruptions.

The nation's largest banks have acted as a source of strength during the COVID-19 pandemic and the banking turmoil of 2023, facilitating credit to small and large businesses and providing billions in deposits to First Republic Bank to help stem contagion within the banking industry.

"Our banking system is sound and resilient."

— Michael Barr,
Vice Chair for Supervision at the Federal Reserve

The Federal Reserve said in its April 2024 Financial Stability Report that the banking system remained "sound and resilient," and when releasing the results of its annual stress test in June, the Fed said large banks are "well positioned to weather a severe recession."

WHY IT MAKESZERO SENSE.VIEW ALL

Resources

11.5.24

FSF

Basel III Endgame – Harming our Capital Markets and the U.S. Economy