Sherman Statement on Anticipated Changes to Basel III Endgame Bank Capital Proposal

Washington, D.C. – Today, Congressman Brad Sherman (CA-32) released the following statement after Michael Barr, the Federal Reserve’s Vice Chair for Supervision, announced anticipated revisions to the Basel III Endgame when the rule will be re-proposed:

“Over a year ago, Federal bank regulators put forth their proposal for the Basel III Endgame capital rule, which would have led to significant increases in the capital requirements for many banking activities and services. After the regional bank failures of early 2023, it was appropriate to revisit capital requirements and to seek greater synergy with European bank regulators. However, over the past few months, publicly and privately, in committee hearings, one-on-one meetings, and in letters to the Administration, I have voiced my significant concerns with some aspects of the proposal – which may have had unintended consequences and left capital requirements poorly calibrated with the underlying risk.

I was very pleased to hear that Federal regulators were diligent and carefully considered the comments made by Congress and the affected parties. Vice Chair Barr agreed to fix elements of the original Basel III Endgame which seemed to unfairly penalize green energy tax equity investments, first-time homebuyers, pension plans, and municipalities, while also increasing costs associated with banks’ support for capital markets activities like supporting Initial Public Offerings (IPOs).

I look forward to working with Federal regulators as they work to operationalize this vision put forth by Vice Chair Barr and to work towards a final capital rule that – consistent with Barr’s remarks – appropriately tailors capital requirements to banking risks while harmonizing our banking regulations with other advanced economies, and it’s important that the final regulations do not discriminate against lending to local main street businesses.”

Yesterday, Michael Barr spoke at the Brookings Institution. A written transcript of Barr’s prepared remarks is available here: https://www.federalreserve.gov/newsevents/speech/barr20240910a.htm

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