Systemic Risk Council
October 4, 2012
Dear Chairman Bernanke, Comptroller Curry, and Acting Chairman Gruenberg:
The Systemic Risk Council, an independent and non-partisan council formed by the CFA Institute and The Pew Charitable Trusts, appreciates the opportunity to comment on the three notices of proposed rulemaking cited above. We have been concerned about the slow progress of regulatory reform of U.S. capital markets, especially those focused on systemic risk, and are therefore pleased to see these proposals. Your rulemaking actions this June begin to address one of our key priorities: immediate action to propose and finalize rules that will substantially strengthen both the quality and amount of capital at the nation’s largest financial institutions.
We strongly support your proposals overall to implement the new Basel III regulatory capital framework, the Standardized Approach for risk-weighted assets contained in Basel II, and the capital-related provisions in the Dodd-Frank Act that will raise both the quality and quantity of capital at banking organizations in the United States. These are good minimum standards that can and should be exceeded, based on the risk profile of an individual banking organization, as determined by that organization’s primary federal regulator. Your actions are in stark contrast to your European counterparts who reportedly want the Basel III capital requirements to be the maximum rather than the minimum. The recent European-British finance ministers’ debate on requiring more than the Basel III minimum capital is just one example. Continental Europeans felt that stronger capital requirements would confer a competitive advantage on UK banking organizations. We believe that a stronger U.S. regulatory capital regime will continue to benefit U.S. banking organizations vis-a-vis their more thinly capitalized European competitors.