ICBA Supports Revising Basel I

Addressing Competitive Issues Critical as Rules Move Forward

Washington, D.C. (October 6, 2005) – The Independent Community Bankers of America today applauded federal bank regulators for approving the issuance of an Advanced Notice of Proposed Rulemaking (ANPR) concerning revisions to the current capital accord, Basel I, for banking institutions that will not be subject to the Basel II capital accord.

"ICBA strongly supports the banking agencies’ efforts to revise Basel I to enhance its risk-sensitivity and to address competitive equity concerns with a bifurcated framework," said Karen Thomas, executive vice president for government relations. "We also commend the agencies for instituting a timetable for revising Basel I with a goal of having a concurrent review process and implementation date for both accords. This will give banks the opportunity to evaluate both proposals at the same time and better compare their competitive impact."

ICBA remains concerned about the competitive disparities between Basel I and Basel II and has recommended additional risk categories for Basel I to enhance its risk-sensitivity and to align capital requirements with risk levels. To minimize regulatory burden for community banks, ICBA has also suggested that well-capitalized, well-managed community banks have the option to remain under the existing Basel I framework if they wish to do so.

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