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

“Vice Chairman [Michael] Barr, whose proposal is basically this Basel proposal, has responded to the question from me, personally, 'Have you had an economic analysis of this?' He said no...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,” Rep. Luetkemeyer said.  

”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,” Mr. O’Leary 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,” Mr. Holtz-Eakin said. 

Watch the full remarks HERE.  

Background: Bank collapses last year spurred panic over potential failures and bank runs that could topple our already fragile economy. With record-high inflation and a president unwilling to curtail his spending, it’s reasonable to look for a safety net to protect Americans. However, the Basel III Endgame proposal, as it’s known, suggests hitting U.S. banks with higher capital requirements often beyond what their internal risk management strategies deem necessary. For some of the more well-known banks, this would lock up an additional 20% of their cash, and some regulators have warned small banks to prepare to follow the rule. Not only does Basel III punish an entire industry for the mismanagement of a few banks, but these requirements pose significant challenges for small businesses and individuals. 

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