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NBA Warns on Basel III Impact on Minority Communities

The proposals will impact the relationship between large banks and minority depository institutions, says the association

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  • Written by  Banking Exchange staff
NBA Warns on Basel III Impact on Minority Communities

The National Bankers Association (NBA) has warned of the negative impact the proposed Basel III reforms will have on minority depository institutions (MDIs).

The association submitted comments on the proposal criticizing the impact of the changes on the cost of banking services for American households and businesses, particularly those in underserved and minority communities.

The joint proposal by the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve System is set to tighten the regulatory capital rules for banks with over $100 billion in assets and those with significant trading activity.

The NBA highlighted the reliance MDIs have on larger banks for investments and warned that the proposal's sweeping consequences could discourage large banks from investing in MDIs and community development financial institutions (CDFIs), potentially pushing financial services and risk outside the regulated banking system.

The NBA, which represents MDIs, emphasized the crucial role its member institutions play in providing access to financial services, mortgages, and small business loans to low- and moderate-income, minority, and underserved communities.

Nicole Elam, the NBA’s CEO and president, said: “The MDIs that receive investments from larger banks, which are subject to the proposed capital increases, directly support economic activity and growth in the communities that they serve.

“As we encourage banks to do more to address challenges in their local communities, including closing the racial wealth gap and responding adequately to climate change, it is important that prudential regulations are consistent with those policy goals.”

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