The undersigned organizations, institutions and nonprofits interested in fostering entrepreneurship represent hundreds of thousands businesses, small and large, and their professionals, from all sectors of the economy employing tens of millions of Americans. As the Senate Committee on Banking, Housing and Urban Affairs (“Committee”) holds a hearing titled, Oversight of Basel III: Impact of Proposed Capital Rules, our organizations would like to draw your attention to the unintended consequences of Basel III upon non-financial businesses.
We understand and support the need to develop and implement appropriate policies to prevent failures that led to the 2008 financial crisis. The financial regulators currently have a number of major initiatives underway including but not limited to: the Basel III capital accords (“Basel III”); the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) including the Volcker Rule, derivatives end-user exemption, systemic risk regulation, and mortgage lending reforms (risk retention and ability to repay); potential money market fund reforms; and the accounting convergence projects. Individually and collectively these initiatives have direct impacts upon the ability of non-financial businesses to mitigate risk and raise the capital needed to expand and create jobs. In considering the implementation of Basel III, we believe that the Federal Reserve Board, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency have failed to consider the impacts of Basel III upon Main Street businesses and how Basel III interacts or conflicts with these other initiatives.