Some community bankers in particular have expressed concerns about the competitive impact of the Basel II capital accord on non-Basel II banks, particularly for residential mortgages and retail and small-business loans. In response, the Federal Reserve has conducted a number of studies on whether Basel II will create significant market distortions for the vast majority of banking organizations that remain on Basel I.
These studies have suggested that competitive impacts will be mild for some business lines, while for others, such as some types of small-business loans, it does appear that unintended competitive advantages and disadvantages might be created - depending in part on how Basel II ultimately is implemented in the United States.