The U.S. federal banking agencies, citing concern raised by financial services industry leaders over the impact of the Basel III requirements, have announced a postponement of the changes to the regulatory capital rules that were scheduled to go into effect on Jan. 1, 2013.
‘Many industry participants have expressed concern that they may be subject to a final regulatory capital rule on Jan.1, 2013, without sufficient time to understand the rule or to make necessary systems changes,’ said the three agencies – the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency – in a joint press statement. ‘In light of the volume of comments received and the wide range of views expressed during the comment period, the agencies do not expect that any of the proposed rules would become effective on Jan. 1, 2013.
‘As members of the Basel Committee on Banking Supervision, the U.S. agencies take seriously our internationally agreed timing commitments regarding the implementation of Basel III and are working as expeditiously as possible to complete the rulemaking process,’ the agencies added. ‘As with any rule, the agencies will take operational and other considerations into account when determining appropriate implementation dates and associated transition periods.’
David H. Stevens, president and CEO of the Mortgage Bankers Association, issued a statement that praised the regulators for postponing the changes.
‘This is a positive development, and hopefully signals that the regulators are rethinking their problematic Basel III rule and are going back to the drawing board for a new proposed rule,’ Stevens said. ‘The rules, as proposed this summer, would have had serious negative repercussions across the lending landscape, with the impact felt most acutely by residential, commercial and multifamily real estate borrowers, investors and lenders in the form of tighter credit and higher costs.
‘It is critical now that regulators re-propose Basel implementation rules that more appropriately allocate risk-weights on real estate-related assets, whether they be residential, commercial or multifamily loans and securities and/or servicing rights,’ Stevens added. ‘Otherwise, credit for real estate transactions will tighten and consumer and borrower costs will go up as banks reduce their real estate lending and mortgage servicing business.’