Operational Risk Capital Requirements for Banking Organizations
Floor Speech
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Ms. TENNEY. Mr. Speaker, I thank the chairman for yielding me the time to speak on this important bill and also for his tremendous and strong leadership on our committee.
H.R. 4296 would set reasonable standards for regulators that are based primarily on the risk posed by a banking organization's current activities and businesses, not on past activities, as you have heard.
Operational risk standards were created and are a product of the European Basel Committee and have been amended twice, actually, since that time. But their adaptation still doesn't hit the mark, and that is why, though the Basel Committee's proposal is well intentioned, this bill and this proposal will amend that to tailor it to the needs and to the effectiveness and efficiency of our banks.
The current framework is based on past activity and will hold operational capital on discontinued products, products that banks don't even have in their portfolios. This bill will correct those errors by allowing our U.S.-based financial regulators to tailor the capital requirements they need based on their unique business model.
H.R. 4296 limits the burden of operational risk capital requirements to a bank's current activities and businesses, gives the bank the ability to determine risk under forward-looking assessment, and would permit adjustment on risk-mitigating factors.
This bill, as you have heard over and over, does not eliminate the Federal Government's ability to assess operational risk or alter the regulators' authority to set capital requirements when doing business on high-risk customers.
Mr. Luetkemeyer's bipartisan legislation would create a commonsense reform to the Basel standards, and I urge all Members to support it.
I also want to thank Congressman Meeks, a fellow New Yorker, for cosponsoring this legislation.
Again, I want to thank Mr. Chairman for his great work on our committee and also Mr. Luetkemeyer for his hard work, his bipartisan work on this bill, for a person who is a banker, a business person from a rural area of our country who really understands the need to protect consumers.
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