Statement for the Record re Hearing Entitled: The Tangled Web of Global Governance: How the Biden Administration is Ceding Authority Over American Financial Regulation

The American Bankers Association (ABA) appreciates the opportunity to provide a Statement for the Record for this hearing entitled: The Tangled Web of Global Governance: How the Biden Administration is Ceding Authority Over American Financial Regulation.

Overview

The ABA strongly supports the Committee’s interest in investigating the chaotic state of global financial standards. In particular, and as noted in the October 20, 2023, letter Chairmen McHenry and Barr sent to GAO, the opaque nature of the Basel Committee on Banking Supervision’s (Basel Committee) process often results in the adoption of financial rules in the United States without meaningful input from Congress or the public. ABA has long believed, that while there is an opportunity for some degree of comment, this opportunity often comes “late in the process, after the basic framework has been substantially developed.”

In response to the proposal and adoption of the original the Basel III standards in the United States, many smaller banking organizations were surprised and frustrated by the manner of the United States’ participation in the Basel Committee’s deliberations. These reactions stemmed from the problem that even though the public was told that the Basel standards were intended for large, internationally active banks, leading to little public attention by other financial firms, the banking agencies (Federal Reserve Board, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency) applied the resulting global plan far beyond that scope. As a consequence, when the Basel III regulations were proposed, they touched off a high level of public and congressional controversy, something that we believe could have been avoided and that should be avoided in connection with any future development of international financial services standards.

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