Republican lawmakers like what they see in bank capital proposals

CQ News featured Randy Benjenk’s commentary in an article about regulatory proposals that would reduce bank capital requirements.

The proposal to standardize capital requirements for regional, midsize, and smaller banks would change how institutions calculate risk weighted assets for mortgage lending and corporate loans. It would implement “a lot more granular approach” for mortgages,” Randy said.

Instead of the current standard 50 percent risk weight that’s assessed for mortgages, banks would determine it based on the size of the loan and the value of the underlying property. It could range from 25 percent to 75 percent, Randy added.

“It might make banks more sensitive to how much borrowers put down when they buy a house,” he noted. “Banks might change their [mortgage] pricing in response to that.”

“There’s a general desire of the regulators to reduce the risk weights of mortgage lending,” Randy concluded.