WASHINGTON — America's Community Bankers said that it supports agency efforts to develop a more risk-sensitive Basel IA for community banks and regulators should also provide Basel II banks with a standardized option.
"The Basel IA framework as proposed does not succeed in ensuring the competitive equity of non-Basel II banking organizations," ACB stated in a Basel IA comment letter. The advanced approaches in the Basel II proposal are "too costly, burdensome and complex," ACB asserted.
ACB argued that banks should be able to choose the capital framework that best suits their business and risk profile. This includes Basel I banks having the option to remain in the current Basel I regime, or adopt the Basel IA framework.
Recommended For You
However, ACB said the changes in the Basel IA proposal "fall far short" of achieving needed risk sensitivity for banks to remain competitive. For example, the proposal addresses the capital charge for residential mortgages, but not for other asset categories that potentially make up a significant portion of many community banks' balance sheet, such as other retail loans and commercial and multi-family residential real estate loans.
ACB also pointed out that the proposed capital charges for most retail loans, including mortgages, would be lower for Basel II banks than under either the Basel I or the proposed Basel IA frameworks. "This outcome would be unacceptable for our member community banks," ACB said.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
