Regulators recognize that Basel I can be enhanced and that the Basel II standardized approach is not well suited to the needs of the vast majority of our domestic-focused community banking organizations. Accordingly, to enhance risk sensitivity without increasing regulatory burden, staffs of the agencies are drafting an advance notice of proposed rulemaking suggesting possible targeted adjustments to our existing regulatory capital rules.
This advance notice will be published close to the publication of the Basel II notice of proposed rulemaking so that the industry and others can view the proposals side-by-side. We expect that the comments we receive on each of the proposals will help us refine the proposals and identify competitive issues between the alternatives.