Hey r/investing community,
I recently came across an interesting article titled "New Basel capital plan deal violates the Administrative Procedure Act" on American Banker's website. The article discusses concerns raised by Raymond Natter, a former deputy chief counsel of the Office of the Comptroller of the Currency, regarding the Federal Reserve and other U.S. banking agencies' pledge to set capital levels at or above those required by the Basel framework.
According to Natter, this commitment raises questions about the agencies' compliance with the Administrative Procedure Act (APA), which mandates a fair and open rulemaking process. He argues that the predetermined nature of the capital plan deal undermines the agencies' obligation to consider all relevant comments and alternatives, potentially violating the APA.
The Basel Committee on Banking Supervision, an organization comprising bank regulatory authorities and central banks from leading economies, developed the Basel framework in response to the lack of uniform bank capital standards across member countries. The framework aims to establish minimum capital requirements adjusted for the perceived risk of different types of bank assets. While the Basel Committee lacks the authority to impose binding capital standards on U.S. banking organizations, the U.S. banking regulators have expressed their commitment to aligning their capital regulations with the Basel framework.
Natter's argument revolves around the need for an open-minded and meaningful comment period during the rulemaking process. He cites legal precedents where courts have held that agencies' predetermined outcomes undermine the public's right to provide meaningful input on proposed rules. Natter suggests that the agencies' commitment to the Basel framework, without considering alternatives or modifications inconsistent with the latest versions of the framework, may raise questions about the legality of the current rulemaking process.
The implications of this issue are significant for the banking sector and the broader economy. The implementation of the Basel framework in the U.S. could have substantial economic consequences, impacting the costs and availability of mortgages, consumer and commercial loans, and the overall stability of the banking system.
As investors, it's crucial to stay informed about regulatory developments and potential legal issues that could impact the financial industry. Understanding the potential violations of regulatory procedures, such as the APA, can provide valuable insights into the decision-making processes of regulatory agencies and their impact on the banking sector.
I encourage you to read the full article here for a more comprehensive understanding of the concerns raised by Raymond Natter. It's essential to consider multiple perspectives and engage in discussions about the potential implications of regulatory decisions on investment strategies.
Submitted November 09, 2023 at 03:47AM by browndroid https://ift.tt/Nmag7JP
