WASHINGTON – Senators anxious that a package of capital and liquidity rules could wreak havoc on community banks are set to meet next week to examine the plan by regulators. Senate Banking Committee Chairman Tim Johnson, D-S.D., announced Wednesday that the panel will hold an oversight hearing on Nov. 14 focusing on a June plan released by the three banking regulators – the Federal Reserve Board, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency — to adopt Basel III in the United States. Michael Gibson, director of banking supervision and regulation for the Fed, John Lyons, chief national bank examiner for the OCC, and George French, deputy director of risk management supervision for the FDIC, are expected to testify. This is the first hearing held by the committee on the package of rules, which are designed to improve the quality and quantity of capital that banks of all sizes must hold to prevent a repeat of the financial crisis. Community banks have led a revolt against the proposals, arguing it could put them out of business. “There are a lot of levels of anxiety on the Hill,” said Wayne Abernathy, executive vice president of financial institutions policy and regulatory affairs for the American Bankers Association. “They’ve heard from enough folks back home that it has credibility with them. It’s not just the one or two bankers that are frequent commenters, they’re hearing it from a lot of bankers in their states back home and they are hearing a consistent message.” More than 1,000 comment letters have been filed by financial institutions large and small raising issues with the plan. Community banks were encouraged by the Independent Community Bankers of America and other trade groups to write personal letters detailing how the set of rules would impact their individual institutions. Several lawmakers also weighed in, including one letter signed by 53 senators from both political parties.
While the election may have kept many members away from their offices in Washington and served as a distraction, observers said lawmakers are likely to become increasingly interested on the package of rules, which are supposed to be finalized by yearend.