The Government Accountability Office’s released a report yesterday backing a point the financial services industry has been making for years: the Financial Stability Oversight Council needs to open up about the process it uses to determine whether to label insurance companies, finance companies, asset managers, and other non-bank financial companies as “systemically important” and to subject them to bank-centric regulations established by the Federal Reserve.
FOR IMMEDIATE RELEASE
April 8, 2014
Requirement is more stringent than leverage ratio outlined in Basel III agreement
Washington, D.C. — A stringent rule finalized today by federal regulators that requires the largest eight banks to maintain a higher ratio of capital than international competitors will put American banks at a competitive disadvantage, according to Financial Services Roundtable (FSR).
“This rule puts American financial institutions at a clear disadvantage against overseas competitors,” said Tim Pawlenty, FSR CEO. “It is disappointing this proposal wasn’t further examined by economic experts and will likely result in tighter access to loans for businesses across the country.”
FSR had urged regulators to adhere to the leverage ratios agreed to under the Basel III international standards. The finalization by the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency today means banks will be required to apply a much higher 5 percent ratio to their holding companies and a 6 percent ratio for their FDIC subsidiaries.
FSR, along with two other trade associations, sent a letter to regulators in October 2013, requesting officials to delay voting on the leverage ratio rule until in-depth studies and additional consideration of the economic impacts to U.S. financial institutions were more fully examined. You can read FSR’s letter here.
Contact Alison Hawkins at 202-589-2427 or at Alison.Hawkins@FSRoundtable.org for more information.
Financial Services Roundtable represents 100 of the largest integrated financial services companies providing banking, insurance, and investment products and services to the American consumer. Member companies participate through the Chief Executive Officer and other senior executives nominated by the CEO. Roundtable member companies provide fuel for America’s economic engine, accounting directly for $92.7 trillion in managed assets, $1.2 trillion in revenue, and 2.3 million jobs. For more information, visit FSRoundtable.org.