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Date published: 9/30/2012
The letter, sent to Federal Reserve Chairman Ben Bernanke and others, comes as an international consortium of banking leaders works on additional guidelines for banking practices.
That consortium is the Basel Committee on Banking Supervision, whose members are bankers and banking regulators from around the world.
In a telephone interview, Warner said he and other senators support the idea of international banking standards, particularly given the global economy and the wide reach of most major banking institutions.
"The whole idea is that most of the big banks anymore, they're not just English banks or American banks they have a presence all over the world," Warner said.
But America's small community banks are unique, he said. Most other countries have only a few major banks. America, Warner said, has about 7,000 banks.
"Most other countries don't have what we call the local community bank," Warner said.
The Basel group, he said, is looking at new standards for banking capital, and while such standards would likely be easy for large banking institutions to meet, he doubts small community banks could.
He and the other senators want Bernanke and other leaders to take that into consideration as the Basel work continues.
"Community banks have little or no access to capital markets," said Warner and other senators in the letter to Bernanke. "Raising capital for community banks in the best of times is challenging and nearly impossible in times of economic stress. We are concerned that the proposed capital rules could exacerbate these funding challenges."
The proposed new rules, the letter said, are very complex and require banks to report a great deal of data. Small banks might not have the resources to comply, the letter said, and requirements for how banks handle securities could affect small banks' liquidity, interest rates and ability to lend.
"We understand that capital is an important source of strength in our financial system," the letter says. "However, the complexity of new global rules adds little value to the community institutions which your agencies rigorously regulate and monitor."
Warner said he and the other senators don't want the international bankers to write a one-size-fits all standard.
"What works for JP Morgan or what works for Barclays Bank or Deutsche Bank isn't the same thing you're going to need for a local Fredericksburg bank," Warner said.
Community banks are often the ones that lend to small businesses, he said, and they shouldn't face additional regulatory burdens in the current economic climate.
While the Basel banking standards aren't exactly regulations with the force of law on American banks, Warner said, they can create what becomes viewed as good banking practices.
"It's hard to do a legislative fix since this is an international organization, but we want to keep bringing pressure onto the Basel group to recognize that America's banking system is different," Warner said.
Chelyen Davis: 504/368-5028