II 

113TH CONGRESS 

1ST SESSION S. 737 

To require the Federal banking agencies to conduct a quantitative impact 

study on the cumulative effect of the Basel III framework devised by 

the Basel Committee on Banking Supervision before issuing final rules 

amending the agencies’ general risk-based capital requirements for determining risk-weighted assets, as proposed in the Advanced Approaches 

Risk-Based Capital Rules Notice of Proposed Rulemaking, the Standardized Approach for Risk-Weighted Assets Notice of Proposed Rulemaking, 

and the Implementation of Basel III, Minimum Regulatory Capital Ratios 

Notice of Proposed Rulemaking issued in June 2012, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 16, 2013 

Mr. SHELBY introduced the following bill; which was read twice and referred 

to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To require the Federal banking agencies to conduct a quantitative impact study on the cumulative effect of the 

Basel III framework devised by the Basel Committee 

on Banking Supervision before issuing final rules amending the agencies’ general risk-based capital requirements 

for determining risk-weighted assets, as proposed in the 

Advanced Approaches Risk-Based Capital Rules Notice 

of Proposed Rulemaking, the Standardized Approach for 

Risk-Weighted Assets Notice of Proposed Rulemaking, 

and the Implementation of Basel III, Minimum ReguVerDate Mar 15 2010 04:32 Apr 20, 2013 Jkt 029200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\S737.IS S737

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latory Capital Ratios Notice of Proposed Rulemaking 

issued in June 2012, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Basel III Impact Study 

5 Act’’. 

6 SEC. 2. STUDY REQUIRED. 

7 The Office of the Comptroller of the Currency, the 

8 Board of Governors of the Federal Reserve System, and 

9 the Federal Deposit Insurance Corporation (in this Act 

10 referred to as the ‘‘Federal banking agencies’’) shall con11 duct the study and issue the report to Congress required 

12 by section 3 prior to issuing any final rule amending gen13 eral risk-based capital requirements for— 

14 (1) revising the advanced-approaches risk-based 

15 capital requirements, as proposed in the Advanced 

16 Approaches Risk-Based Capital Rule of Notice of 

17 Proposed Rulemaking issued in June 2012 and pub18 lished in the Federal Register on August 30, 2012 

19 (in this Act referred to as the ‘‘Advanced Approach 

20 NPR’’); 

21 (2) determining risk-weighted assets, as pro22 posed in the Standardized Approach for Risk23 Weighted Assets Notice of Proposed Rulemaking 

24 issued in June 2012 and published in the Federal 


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1 Register on August 30, 2012 (in this Act referred to 

2 as the ‘‘Standardized Approach NPR’’); and 

3 (3) determining minimum regulatory capital ra4 tios, as proposed in the Regulatory Capital, Imple5 mentation of Basel III, Minimum Regulatory Capital 

6 Ratios, Capital Adequacy, Transition Provisions, and 

7 Prompt Corrective Action Notice of Proposed Rule8 making issued in June 2012 and published in the 

9 Federal Register on August 30, 2012 (in this Act 

10 referred to as the ‘‘Basel III NPR’’ and collectively 

11 with the Advanced Approach NPR and the Stand12 ardized Approach NPR, the ‘‘NPRs’’). 

13 SEC. 3. STUDY AND REPORT. 

14 (a) STUDY.— 

15 (1) IN GENERAL.—The Federal banking agen16 cies shall jointly conduct a quantitative impact study 

17 of the effect of the NPRs on the minimum regu18 latory capital requirements of insured depository in19 stitutions and insured depository institution holding 

20 companies. 

21 (2) SCOPE OF STUDY.—As part of the study re22 quired by this subsection, the Federal banking agen23 cies shall— 


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1 (A) determine current capital levels (as of 

2 December 31, 2012) at financial institutions 

3 covered by such report; 

4 (B) separately identify specific provisions 

5 in— 

6 (i) the Basel III framework devised by 

7 the Basel Committee on Banking Super8 vision (in this Act referred to as the 

9 ‘‘Basel III provisions’’); and 

10 (ii) the Dodd-Frank Wall Street Re11 form and Consumer Protection Act, and of 

12 amendments made by that Act (in this Act 

13 referred to as the ‘‘Dodd-Frank provi14 sions’’, and collectively with the Basel III 

15 provisions, referred to as the ‘‘identified 

16 provisions’’) which shall include from the 

17 Dodd-Frank Wall Street Reform and Con18 sumer Protection Act, and the amend19 ments made by that Act— 

20 (I) section 115 (regarding en21 hanced supervision and prudential 

22 standards); 

23 (II) section 165 (regarding en24 hanced supervision and prudential 

25 standards); 


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1 (III) section 166 (regarding early 

2 remediation requirements); 

3 (IV) section 171 (regarding lever4 age and risk-based capital require5 ments); 

6 (V) section 619 (regarding prohi7 bitions on proprietary trading and 

8 certain relationships with hedge funds 

9 and private equity funds); 

10 (VI) section 939 (regarding the 

11 removal of statutory references to 

12 credit ratings); 

13 (VII) section 941 (regarding reg14 ulation of credit risk retention and ex15 emption of qualified residential mort16 gages); and 

17 (VIII) section 1412 (regarding 

18 safe harbor and rebuttable presump19 tions for qualified mortgages); and 

20 (C) estimate and evaluate the impact of 

21 such identified provisions on affected United 

22 States institutions in accordance with this sec23 tion. 

24 (3) CONTENTS OF STUDY.—The Federal bank25 ing agencies shall— 


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1 (A) in conducting the study required by 

2 this section, determine and estimate the likely 

3 cumulative impact of the NPRs and the identi4 fied provisions on required regulatory capital 

5 levels, capital quality, asset quality, and risk 

6 management at covered United States financial 

7 institutions; and 

8 (B) based on such findings, provide an as9 sessment regarding— 

10 (i) changes to required capital levels 

11 in the aggregate, per asset class and insti12 tution size based on the Basel III provi13 sions, the Dodd-Frank provisions, and sep14 arately, on the identified provisions; 

15 (ii) the aggregate increase or decrease 

16 of total risk-weighted asset levels for the 

17 institutions to which the Advanced Ap18 proach NPR and the Standardized Ap19 proach NPR would be applicable based on 

20 their size and asset class; 

21 (iii) whether the NPRs and identified 

22 provisions will cause capital levels at cov23 ered institutions to fluctuate with more 

24 frequency or by greater amounts than the 

25 current rules and indicate what, if any, 


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1 safety and soundness issues such fluctua2 tions raise for financial institutions or the 

3 financial system, including a determination 

4 of whether such fluctuations will make the 

5 United States financial system more or 

6 less safe than the current rules; 

7 (iv) whether the NPRs and the identi8 fied provisions will result in the discontinu9 ation of the use of certain risk manage10 ment tools by covered financial institutions 

11 and the impact on the safety and sound12 ness of financial institutions and the finan13 cial system; 

14 (v) the cumulative impact that the 

15 NPRs and the identified provisions will 

16 have on— 

17 (I) the United States economic 

18 growth, in general, and specifically, on 

19 the Gross Domestic Product; 

20 (II) availability and cost of credit 

21 in low- and moderate-income areas; 

22 and 

23 (III) availability and cost of resi24 dential mortgages, home equity lines 

25 of credit, auto loans, student loans, 


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1 and commercial loans, including small 

2 business credit; 

3 (vi) the variance in required capital 

4 levels, assets, and asset quality between in5 stitutions that implement the advanced ap6 proaches or approaches to risk weighting 

7 of assets, as proposed in the Advanced Ap8 proaches NPR, and those that use the 

9 standardized approach, as proposed in the 

10 Standardized Approach NPR, and the im11 pact on competition between entities using 

12 different approaches; and 

13 (vii) historical probability of default 

14 and loss given default of residential mort15 gage loans and the proposed risk 

16 weightings in the Standardized Approach 

17 NPR, and whether such proposed risk 

18 weightings are appropriately and fairly 

19 calibrated. 

20 (4) VOLUNTARY PARTICIPATION.—In carrying 

21 out the study required by this section, the Federal 

22 banking agencies— 

23 (A) shall rely on data available to the 

24 agencies through call reports and other data 


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1 gathering processes already employed by the 

2 Federal banking agencies; and 

3 (B) may seek input and participation from 

4 insured depository institutions and insured de5 pository institution holding companies, provided 

6 that such request shall not impose undue bur7 den on participating institutions and that par8 ticipation in the study by any insured deposi9 tory institutions or insured depository institu10 tion holding companies shall be voluntary. 

11 (b) REPORT.— 

12 (1) IN GENERAL.—Not later than 9 months 

13 after the date of enactment of this Act, the Federal 

14 banking agencies shall issue a report to the Com15 mittee on Banking, Housing, and Urban Affairs of 

16 the Senate and the Committee on Financial Services 

17 of the House of Representatives on the results of the 

18 study required by subsection (a). 

19 (2) CONTENTS.—The Federal banking agencies 

20 shall include the methodologies and assumptions 

21 used in the study, as well as the required elements 

22 of the study listed in subsection (a) in the report re23 quired in this subsection. 


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1 SEC. 4. COMPETITIVE EQUALITY. 

2 Section 908(a)(1) of the International Lending Su3 pervision Act of 1983 (12 U.S.C. 3907(a)(1)) is amended 

4 by adding at the end the following: ‘‘Each appropriate 

5 Federal banking agency shall, consistent with safety and 

6 soundness, seek to ensure that any differences in rules im7 plementing the capital standards required under this sec8 tion or other provisions of Federal law for banking institu9 tions, savings associations, bank holding companies, and 

10 savings and loan holding companies do not give competi11 tive advantages to any class or group of such institutions, 

12 associations, or companies, unless required by other Fed13 eral law, and do not undermine any requirements for en14 hanced supervision and prudential standards required by 

15 section 115 of the Dodd-Frank Wall Street Reform and 

16 Consumer Protection Act (12 U.S.C. 5325).’’. 

Æ 


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