via e-mail
McHenry Savings Bank
353 Bank Drive
McHenry, IL 60050
Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, N.W.
Washington, DC 20429
November 3, 2003
Dear Mr. Feldman:
As you are aware, the proposal for the Basel II Accord (internal
model for determining capital requirements) has a comment period that
ends on November 3, 2003.
Our CEO/President, Kathleen E Marinangel, has been working to inform
the regulators, banking trade groups, the Basel committee, the Treasury
and others of the importance of this pending proposal to community
banks. As an employee of McHenry Savings Bank in McHenry, Illinois, I
agree wholeheartedly with the following messages:
Ø Community banks must be allowed to 'Opt-In' to the new proposed
Basel II Accord, and
Ø The Basel I Accord as adopted in 1988 must be revised to more truly
reflect asset risk for those institutions that choose not to 'Opt-In' to
Basel II.
It is critical that community banks are not forced to adopt the Basel
II Accord as proposed. Community banks must be allowed to 'Opt-In' to
this new proposal. The New Accord is trying to more closely link minimum
capital requirements with an institution's risk profile. Community banks
must retain the option to leverage their capital, regardless of the
complexity of the calculations to prove their risk-worthiness. Small
institutions will be at a competitive disadvantage to the extent that
they cannot deploy capital as efficiently as larger, more sophisticated
institutions.
If capital requirements are changed and new options are developed,
institutions should be allowed to choose between developing their own
internal risk rating systems or maintaining a modified risk based system
with more buckets and division of assets to quantify risk more
appropriately.
Sincerely,
Renee M. Jenkins
Assistant Vice President
Teller Operations
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