Jefferson City News

Congressman Blaine Luetkemeyer (MO-3) and experts, including Shark Tank star Kevin "Mr. Wonderful" O'Leary and American Action Forum President Doug Holtz-Eakin, have raised concerns about the negative impact of the Federal Reserve's Basel III Endgame proposal on small businesses and community banks.

During a discussion, Rep. Luetkemeyer pointed out that Vice Chairman Michael Barr, who proposed the Basel III rules, admitted that there has been no economic analysis of the proposal. Rep. Luetkemeyer said, "I don't know where [Congresswoman Nydia Velazquez] is getting her information from, but even the Fed Vice Chair of Regulation who proposed the rules said there is no economic analysis, which is horrible from the standpoint of proposing rules and understanding the effect on this economy."

Mr. O'Leary, known for his role on Shark Tank, expressed his strong opposition to Basel III, stating, "I think Basel III is incredibly bad policy, and that should be the best thing to do with bad policy is keep looking at it till everybody agrees it's bad policy. I'd keep looking at it. It's horrible."

Doug Holtz-Eakin, President of the American Action Forum, highlighted the interconnectedness of the banking system and how the Basel III requirements would affect smaller banks. He said, "The smaller banks often rely on larger banks for funding needs of various maturities and it'll spill over to the smaller banks. You cannot isolate it to just the largest banks."

The Basel III Endgame proposal aims to impose higher capital requirements on U.S. banks, going beyond what their internal risk management strategies consider necessary. This would tie up an additional 20% of cash for some well-known banks and has prompted warnings to small banks to prepare to comply with the rule. Critics argue that Basel III punishes the entire banking industry for the mismanagement of a few banks and poses significant challenges for small businesses and individuals.

The concerns raised by Congressman Luetkemeyer, Kevin O'Leary, and Doug Holtz-Eakin highlight the need for a thorough economic analysis and further examination of the Basel III proposal. The impact on small businesses and community banks cannot be ignored, and it is crucial to find a balanced approach that considers the interests of all stakeholders.