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November 30, 2012

Basel Burden on Small Banks Faces Scrutiny at House Hearing

U.S. community banks and insurers are pressing their case for separate treatment from the biggest financial firms as House lawmakers examine the impact of international capital rules at a Washington hearing.

“Industry executives testified today along with regulators before two House Financial Services subcommittees after a Nov. 14 Senate hearing on efforts to implement standards adopted by the Basel Committee on Banking Supervision.”

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“Marc Jarsulic, chief economist at Better Markets Inc., said in his prepared statement that affected firms with less than $10 billion in assets should have some of the rules phased rather than getting an exemption.

‘Serious Risks’

“The proposed capital rules do not require banks to use nearly enough equity finance and will allow continued excessively high debt financing, which will continue to pose serious risks of runs,” said Jarsulic, whose Washington-based group promotes financial regulations.”

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