On December 13, the Futures Industry Association (FIA) conducted a congressional briefing for staff from the House Agriculture Committee and interested Representatives’ personal offices on the proposed U.S. implementation of new banking regulations known as “Basel III Endgame.” APGA’s Vice President of Government Relations, Stuart Saulters, was invited to share the public gas systems’ perspective as a representative on the panel alongside a broad group of other potentially impacted stakeholders. Public gas systems and other industries that process commodities are concerned that these onerous banking regulations will result in a trickle-down of higher costs for consumers and will also create significant barriers for them to manage risk by engaging in hedging. APGA and others encourage regulators to tame down these proposed regulations and consider the significant impact they will have on the prices of goods and services that American consumers must pay.
The Basel Committee on Banking Supervision (BCBS) was established in the 1970s and serves as a forum for global banking regulators to meet and agree upon nonbinding minimum standards for banks and financial institutions that each participating government must individually implement. In July, U.S. regulators announced the newest iteration of regulations that incorporate parts of those proposed at the BCBS in 2017 known as Basel III Endgame.
The proposed BASEL III Endgame regulations will increase costs for banks that finance hedging transactions and will make it more expensive for public gas utilities to engage in the practice. When the cost of these transactions increases, energy rates also must increase in order to fill the gap for nonprofit utilities and small businesses. There is also concern that higher costs for small- and medium-sized utilities to engage in hedging will drive them to abandon the practice altogether, resulting in a riskier market than currently exists.
Panelists at the briefing spoke about the broad and considerable impacts that these regulations will have on everyday consumers and particularly the utilities and businesses that rely on banks to do their business and manage risk. FIA representatives noted, however, that there is a “long runway for additional advocacy [before the regulations are finalized].” APGA and several other end-users have joined together in calls for U.S. regulators to walk back these regulations and better research the potential negative impacts they will have on the many industries that will be affected. Congressional leaders in House and Senate Committees of jurisdiction have also shared concern that now is not the time for American consumers and businesses to be saddled with additional costs. Congressional staffers in attendance praised the panelists for their statements on the potential impacts to their respective industries and encouraged more advocacy from interested stakeholders on this issue. They shared further the importance of engaging policymakers on the broad impact that Basel III Endgame will have on the many industries that do business with the affected banks.
APGA staff will continue to monitor and engage with policymakers on potential congressional action. APGA also plans to join with other aligned stakeholders to submit comments by the January 16 deadline further voicing our concerns.
For questions on this article, please contact Josh St.Pierre of APGA staff by phone at 202-407-0015 or by email at jstpierre@apga.org.