MNI: Fed's Barr To Testify Changes Coming To Basel Proposal

Federal Reserve Vice Chairman for Supervision Michael Barr will tell Congress Wednesday that regulators expect “broad, material” changes are coming to the proposed Basel III endgame capital standards.

"I expect we will have a set of broad, material changes to the proposal that allow us to have a broad consensus in moving the proposal forward," Barr said in prepared testimony for the U.S. House Financial Services Committee. His remarks did not touch on monetary policy.

Barr said overall the "banking system remains sound and resilient" and asset quality remains generally sound, but lending continues to grow but has slowed from the rapid pace of 2022, reflecting decreased demand and tighter lending standards.

The vice chair's comments also touched on rising delinquency rates among certain commercial real estate loans and credit card loans. In response, banks have increased loan loss provisions, said Barr.

"On this basis, combined with their capital positions, the banking sector as a whole should be prepared to absorb loan losses that may materialize and continue fulfilling its vital role providing credit to households and businesses," he said. "The Federal Reserve continues to monitor these conditions closely."