Mike Rounds Grills Biden Nominee On Basel III: ‘Do You Support Another Comment Period?’

3 months ago

Earlier this month, Sen. Mike Rounds (R-SD) questioned a nominee on the proposed Basel III framework during a Senate Banking Committee hearing.

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Transcript

00:00Senator Rounds from South Dakota is recognized. Thank you, Mr. Chairman.

00:03First of all, to all of you and to your families, thank you for being here.

00:07To the families, this can be a pretty emotional time period for the folks that

00:11are up here in front because they don't have any idea at all what kind of

00:14questions they're really going to get. They've had a chance to meet with most

00:17of us beforehand and they get an idea about what it is,

00:20but there's always that trepidation and you all get to put up with them during

00:24that time period, so we thank you for that.

00:30Ms. Johnson and Mr. Ito, thank you for being here.

00:33I'm not going to have any questions for either one of you,

00:36so you can relax for just a minute here.

00:38Ms. Romero, I appreciate the opportunity

00:42to visit with you. As you know, the federal banking

00:45agencies, including the FDIC, have proposed

00:49a comprehensive revision to their capital rules that would

00:53substantially increase capital requirements. This revision is known as

00:56the Basel III endgame, and we talk about it a lot

01:00within the banking institutions, but not a lot outside.

01:04We know that there will be material changes made to the entire proposal.

01:08Just Tuesday, Chair Powell says that he supports

01:12another comment period. If confirmed, would you support another comment period?

01:19Thank you, and I really appreciated when we met in your office and were able to

01:22talk through some of these deep, complex issues. I think

01:26reproposal is always on the table when you have

01:29a rule that's proposed and you get that many negative comments.

01:32There is the Administrative Procedures Act and the logical

01:37outgrowth doctrine that would have to be applied,

01:40but I think it's on the table. I'm not looking to get something done

01:44fast. I'm looking to get something done right.

01:47In this particular case, you would be

01:51expected to make a decision rather quickly as to whether or not that's

01:54going to occur. Your nomination is up right now, and

01:59they're in the middle of making this decision right now,

02:02so you're going to be put in a really tough position here, and

02:05if you haven't done the background to decide whether or not

02:08you would support a continuation or not, that's going to be a problem.

02:14Well, Senator, I've done the background on what's going on with

02:18Basel. I'm just not privy to the changes that are being made,

02:22and do they fall within the logical outgrowth doctrine, do they not, but

02:26what I can assure you is I am very open

02:29to a re-proposal, but if confirmed, I would need to get in there and sort of

02:33understand this, but I'm not looking to rush

02:36something through for the sake of rushing it through. I'm looking to make

02:39sure that the regulation is long-lasting, it's

02:42going to work, and I want to understand all the unintended consequences.

02:44There is another possibility on that because that decision is going to be

02:48made very, very shortly, and I recognize that they're asking you

02:51to move into a position rather quickly in this particular case.

02:55If you are confirmed, and we need to move forward quickly in

03:01this particular case just because of the timing, this has been around for a long

03:04time, but it's coming up now, would you recuse yourself from voting

03:08and allow Vice Chair Hill to finish the work on the Basel III

03:12endgame proposal? Would you commit to that?

03:16Senator, I think if I'm confirmed as chair,

03:20there'll be a decision made at the board level.

03:23I don't see a reason to recuse, but I can tell you

03:26what I'm trying to explain is I haven't seen the changes. I'm certainly

03:30inclined to have a re-proposal whenever there are

03:35this many comments, and then there's going to be broad material changes.

03:38That's my inclination. The broad material changes

03:41appear to be necessary if this is going to move forward at all. I think that's

03:44pretty clear because I think over 95 percent of all the

03:47requests recommended making major changes in multiple different areas on

03:51it. Okay. In light of the, Ms. Romero, in light of

03:55the recent Supreme Court ruling on Chevron deference,

03:58agencies like the FDIC will need to make certain that they are complying with

04:03congressional intent. If confirmed, do you commit to

04:07implementing the Economic Growth Regulatory Relief and Consumer

04:10Protection Act, that's S-120-2155, as intended by Congress?

04:16I'm just curious. This really is a case of where

04:20there has been a rule-making change in the way that it's going to be

04:25viewed in the future by the courts. Intent is really going to be important.

04:32Give us your thoughts. Yeah, thank you for the

04:35for that question, Senator. Yeah, I really believe in

04:39that we are limited as regulators to the laws that are before us, and

04:43we always strive to look at congressional intent. Everything I do

04:46now is to sort of say, okay, well, what's the authorization here from Congress,

04:50and how do we stick with it? S-2155 is the law of the land.

04:53I'm gonna comply with it. I really believe in

04:56the sentiments behind it in terms of tailoring

04:59regulation. As we talked about it, all banks are not the same,

05:02and I also want to understand the unintended consequences of all these

05:06rules. So I just, if confirmed, would you commit to

05:11consulting with Congress if you view intent is not clear?

05:15100 percent, Senator. Thank you.

Mike Rounds Grills Biden Nominee On Basel III: ‘Do You Support Another Comment Period?’

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