On the recordFebruary 27, 2018
I thank the chairman for his great leadership and for helping us with this legislation. Mr. Speaker, I rise today in support of H.R. 4296, legislation that would set reasonable parameters for Federal financial regulators when establishing operational risk capital requirements so that banks can best leverage their capital to grow their local economies. In the wake of the financial crisis, operational risk capital requirements were first agreed to at the Basel Committee. That is a foreign group of folks who get together. We have accepted some of their advice, unfortunately, and then it was implemented in the United States by the FDIC, the OCC, and the Federal Reserve. Like many concepts fashioned at the Basel Committee, the original intent may have seemed to be a good idea, but the implementation has brought about confusion and unintended consequences. The committee, realizing it didn't get it right, has revised its recommended operational risk standards on more than one occasion in the last few years. The first was in the fall of 2014, when the committee found that its original standards were under-calibrated. The second came in 2016, when the Basel Committee suggested a requirement that would force banks to look back and hold capital against discounted activities and products. This is not an appropriate way to determine capital requirements. So what does this mean?…
