Regulatory Capital: Category I and II Banking Organizations, Banking Organizations with Significant Trading Activity, and Optional Adoption for Other Banking Organizations

The Housing Policy Council, a trade association of mortgage lenders and insurers, supports the proposed rules for improving the capital treatment of mortgage-related assets. They argue the rules better align capital requirements with risk, specifically praising the LTV-based risk weight approach and the elimination of capital deductions for mortgage servicing assets.

The Committee on Capital Markets Regulation, an independent research organization, broadly supports the proposed Basel III "finalization" reforms to improve the alignment of capital requirements with bank risks. They argue that the proposals will enhance the ability of banks to support U.S. financial markets and the real economy while maintaining a resilient capital framework.

Arch Capital Group, Ltd. supports the proposed risk-based capital requirements but argues that the current proposals fail to sufficiently recognize the loss-mitigating benefits of private mortgage insurance (MI). The company advocates for specific amendments that allow banks to recognize MI coverage (subject to a counterparty haircut), permit insurance-based credit risk transfer (CRT), and lower risk weights for prudentially regulated eligible guarantors to improve bank participation in the mortgage market.

Mortgage Guaranty Insurance Corporation (MGIC), a monoline mortgage insurer, supports the proposed action but argues for specific improvements to the risk-based capital requirements. They advocate for expanded recognition of the loss-mitigating benefits of mortgage insurance (MI) and a pathway for well-capitalized monoline MI companies to qualify for the "corporate" 65% risk weight.

The National Housing Conference (NHC), a nonpartisan 501(c)(3) coalition, supports the proposed revisions to risk weights for residential mortgage loans but urges further calibration for high LTV loans and private mortgage insurance. They also advocate for lower risk weights on Low-Income Housing Tax Credit (LIHTC) investments, mortgage servicing rights, warehouse lines of credit, and GSE multifamily mortgage exposures to better align capital requirements with observed risk and support housing affordability.

The Conference of State Bank Supervisors (CSBS), representing state banking regulators, supports the proposed rules aimed at enhancing risk sensitivity, consistency, and transparency in the regulatory capital framework. They argue for specific refinements, including expanding the Community Bank Leverage Ratio (CBLR) framework, adopting proposed mortgage capital treatments, and ensuring a level playing field for smaller banks and trust companies.

A coalition of 11 real estate trade associations supports the proposed revisions to the risk-based capital framework but requests specific refinements to better calibrate capital requirements for commercial and multifamily real estate (CRE) exposures. They argue for more granular risk weights, broader definitions of regulatory CRE to avoid structural penalties, and lower risk weights for specific assets like multifamily loans, LIHTC investments, and DUS exposures to ensure continued support for the CRE market.

The Commercial Real Estate Finance Council (CREFC) generally supports the proposed revisions to the risk-based capital framework, noting that they incorporate several requested industry improvements. However, the organization requests specific refinements to ensure capital requirements for commercial real estate (CRE) exposures are accurately calibrated to risk, maintain competitive equity across different bank sizes, and preserve essential financing channels.

The Independent Community Bankers of America (ICBA) supports the proposed mortgage-related revisions but argues that further reforms are necessary to ensure parity between community banks and large institutions. They advocate for specific risk-weight reductions for community bank assets, the preservation of the Collins Amendment floor, and a more thorough analysis of the systemic risks posed by the proposed changes for large banks.

U.S. Bancorp supports the fundamental objectives of the proposed regulatory capital framework, which aims to enhance risk sensitivity and reduce complexity. However, the bank requests specific modifications to the transition periods for AOCI, the risk weight calibration for mortgage servicing assets, and the definitions of "commitments" and "unconditionally cancelable" to ensure the rules remain aligned with underlying economic risks.