Extending Comment Period Will Foster Uncertainty

U.S. banking regulators’ decision to extend the comment period on proposed tighter capital rules for U.S. banks only serves to delay much-needed improvements in risk management for the largest financial institutions, industry consultant Mayra Rodriguez Valladares said.

On August 8, amid pressure from Republican lawmakers and bank lobbyists, the Federal Reserve and two other U.S. bank regulators extended a comment period on the so-called Basel III measures until late October. That’s sure to foster uncertainty among the biggest banks that are critical to the health of the U.S. economy, Rodriguez Valladares said in a new report.

Delaying the proposed rules makes it difficult for big banks “to direct appropriately their Basel implementation and compliance efforts,” Rodriguez Valladares wrote. “Basel is here, and delays will not eliminate its need."

Valladares is managing principal with MRV Associates, a New York-based capital markets and financial regulatory consulting firm.

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