The Independent Community Bankers of America (ICBA) announced that it strongly supports the Conference of State Bank Supervisors’ (CSBS) opposition to proposed Basel III capital standards. CSBS, the association of state banking regulators, said the proposed regulations are too complex, will curtail credit availability and will lead to further industry consolidation.

“ICBA strongly agrees with the CSBS that proposed Basel III capital standards are too complex and will drive many traditional community banks out of the mortgage market,” ICBA President and CEO Camden R. Fine said. “This will result in even greater concentration of the banking industry in Wall Street megabanks and leave Main Street customers in the lurch. Community banks maintain the highest capital levels in the banking industry. They should not have to jump through the same regulatory hoops as the largest and riskiest institutions that contributed to the greatest financial crisis since the Great Depression.”

Basel III was conceived as an international standard that would apply only to the largest, internationally active banks because of their contributions to the Wall Street financial crisis. However, the proposed rule issued by federal regulators would impose the new regulations on banks of all sizes. No bank—no matter how small—would be exempt.

ICBA is particularly concerned with the impact of proposed risk weights on mortgages and certain types of commercial loans and is seeking to ensure that community banks have the option to continue using Basel I risk weights. Community banks did not contribute to the financial crisis and subsequent economic downturn. Imposing excessively complex and punitive regulatory standards on them would only endanger the nation’s economic recovery by curtailing lending.