#AI ChatGPT - Grok: Though authorized by the U.S. Congress, are the regulators’ risk weighted bank capital requirements, a law?

I asked: If the U.S. Congress has authorized regulators to impose a system where different types of assets are assigned different risk weights, influencing the amount of capital banks must hold against them, does that make such system a law?"

ChatGPT answered:

 

Yes — but with important nuance.

When the U.S. Congress delegates authority to regulatory agencies (like the Federal Reserve, FDIC, or OCC) to implement and enforce a system — such as risk-weighted capital requirements under the Basel framework — it does not make the risk weights themselves a statute (law enacted directly by Congress). Rather:

Congress passes enabling legislation, such as the Federal Reserve Act or Dodd-Frank Act, that gives regulators the legal authority to create detailed rules to ensure financial stability.

Within that authority, regulators issue binding regulations, such as capital adequacy requirements, often aligned with Basel standards.

These regulations have the force of law, meaning banks must comply with them, and noncompliance can be punished by law (e.g., enforcement actions, fines, or restrictions).

So to summarize:

No, the specific risk weights themselves are not laws passed by Congress, but

Yes, they are legally binding regulations that have the force of law because Congress authorized regulators to create and enforce such frameworks.

If Congress disagreed with them, it could change the underlying law or restrict regulatory discretion.

I said: Thanks!

It replied: You're very welcome! If you'd ever like to explore how that delegation of authority could be challenged or restructured—or anything else related—just let me know.

Grok answered:

 

No, the system of risk-weighted capital requirements imposed by regulators is not itself a law, but rather a regulation or regulatory framework established under the authority granted by Congress through legislation. Here's the distinction:

 

Law: A law is a statute passed by Congress and signed by the President (or enacted through other constitutional processes). It provides the legal framework and authority for regulators to act. For example, laws like the Dodd-Frank Act or earlier banking legislation (e.g., the Federal Reserve Act or Basel-related enabling statutes) may authorize regulators to set capital requirements for banks.

 

Regulation: The risk-weighted asset system, such as that based on Basel Committee guidelines, is a set of rules or standards issued by regulatory agencies (e.g., the Federal Reserve, OCC, or FDIC) under the authority of a law. These regulations have the force of law, meaning they are legally binding, but they are not laws themselves. They are administrative rules designed to implement the broader statutory framework.

 

In this case, Congress authorizes regulators to create and enforce such systems through legislation, but the specific risk weights and capital requirements are determined by the regulators (e.g., through Federal Register notices, rule-making processes, or adoption of international standards like Basel III). These regulations are subject to the Administrative Procedure Act, which governs how agencies create and enforce rules, and can be challenged in court if they exceed the authority granted by Congress or are deemed arbitrary or capricious.

In summary, the risk-weighted system is a regulatory framework, not a law, but it carries legal weight because it is authorized by statute.

 

I said: Thanks!

 

It replied: You're welcome! If you have more questions about banking regulations or anything else, I'm here to help.

Note: The answers are copied exactly from those given to me by ChatGPT and Grok

Here my many other questions to ChatGPT and Grok on bank regulations

#AI ChatGPT – OpenAI: Could you help and provide transparency on the US Congress budget proceedings?

I asked OpenAI: 

"Do you think that if given the necessary information in a timely fashion, you could be helpful to the US Congress in its process of deciding the federal government budget"?

If so, could your participation provide the citizens with more transparency on the proceedings and final budgets?"

OpenAI answered:

"I am a computer program created by OpenAI, and I don't have the capability to participate in government processes, such as the US Congress's budget decision-making. While I can provide information, answer questions, and assist with various tasks, I do not have the ability to engage in political or legislative activities.

However, technology can play a role in providing transparency and information to citizens in the budgeting process. Government websites and platforms can use AI and other technologies to make information more accessible and understandable to the public. Additionally, experts and analysts can use AI tools to analyze budget proposals and provide insights.

Ultimately, the transparency of government proceedings and final budgets depends on the actions and policies of elected officials and government agencies. It's essential for governments to prioritize transparency and provide access to information so that citizens can be informed and engaged in the decision-making process."

Thanks!

You're welcome! If you have any more questions or need further assistance, feel free to ask. I'm here to help!

Note: The answers are copied exactly from those given to me by OpenAI

A good way to fight the reigning Bureaucracy Autocracy is with a Citizens’ Democracy, empowered by Artificial Intelligence. 

ChatGPT - OpenAI: Getting to know you!

#AI #OpenAI #ChatGPT: Has US Congress approved risk weighted bank capital requirements with decreed weights 0% Federal Government – 100% We the People?

I asked ChatGPT:

"The Congress shall have the power to borrow Money on the credit of the United States." US Constitution

Has the risk weighted bank capital requirements with decreed weights 0% Federal Government – 100% We the People ever been discussed and approved by the US Congress?"

ChatGPT answered:

"As of my knowledge cutoff in September 2021, there has been no specific discussion or approval by the U.S. Congress regarding risk-weighted bank capital requirements with decreed weights of 0% for the Federal Government and 100% for "We the People." The risk-weighted capital requirements are primarily regulated by the U.S. federal banking agencies, such as the Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC).

These agencies establish and enforce capital adequacy standards for banks and financial institutions to ensure their stability and ability to withstand financial stress. The risk weights assigned to different types of assets, including government debt, are determined through regulatory processes, economic considerations, and risk assessments. However, the specific weights you mentioned are not commonly used in existing capital adequacy frameworks or discussions.

It's worth noting that discussions and debates surrounding banking regulations and capital requirements continue to take place in Congress, regulatory agencies, and academic circles. Therefore, it's always possible that new proposals or discussions have emerged since my last update. To get the most accurate and up-to-date information, I recommend consulting official government sources or recent news on banking regulations and congressional actions."

I asked ChatGPT:

"Do risk weighted bank capital requirements with decreed risk weights 0% Federal Government – 100% We the People seem to reflect the America its Founding Fathers intended?"

ChatGPT answered:

"The determination of risk-weighted bank capital requirements is primarily a technical and regulatory matter aimed at ensuring the stability and soundness of the banking system. While the intention of the Founding Fathers in regard to specific capital requirements cannot be definitively determined, it is unlikely that they had such specific risk weights in mind when drafting the Constitution.

The Founding Fathers' intentions were focused on establishing a framework for governance, protecting individual rights, promoting economic prosperity, and ensuring the stability of the young nation. The Constitution grants Congress the power to borrow money on the credit of the United States, but it does not prescribe specific risk weights for bank capital requirements or provide detailed guidance on banking regulations.

The concept of risk-weighted capital requirements as we understand them today emerged much later in history as a response to financial crises and a means to safeguard the banking system. The specific risk weights you mentioned, assigning a 0% risk weight to the Federal Government and a 100% risk weight to "We the People," do not align with the conventional approach to risk assessment and capital requirements used in banking regulation.

It's important to note that interpretations of the intentions of the Founding Fathers can vary, and different perspectives may exist on what policies and frameworks best reflect their principles. Ultimately, the determination of capital requirements and banking regulations is an ongoing process that involves policymakers, regulatory agencies, and public discourse to address the changing needs and challenges of the modern financial system.

I asked ChatGPT:

"Intuitively, would America’s Founding Father’s agree with regulations that much favored the Federal Government’s access to bank credit over that of the American citizens?"

ChatGPT answered:

"Intuitively, it is challenging to speculate on the specific opinions that the Founding Fathers would hold regarding modern-day banking regulations and the allocation of credit access between the Federal Government and American citizens. The Founding Fathers held a range of perspectives and had diverse views on economic and governance matters.

The Founding Fathers were primarily concerned with establishing a system of government that protected individual rights, provided for the common defense, and promoted the general welfare. They were mindful of the dangers of excessive government power and sought to create a balance of power between different branches and levels of government.

While the Founding Fathers recognized the importance of a strong central government, they also emphasized the importance of individual liberty and limited government intervention in economic affairs. They valued the principles of free markets, private property, and limited government interference in economic decision-making.

Applying this intuitive understanding to the specific scenario you mentioned, it is likely that the Founding Fathers would be cautious about any regulatory framework that significantly favored the Federal Government's access to bank credit over that of individual citizens. They would likely prioritize preserving the principles of economic liberty, fair competition, and limiting government overreach.

However, it is essential to note that the banking system and financial regulations have evolved significantly since the time of the Founding Fathers. The complexities and challenges of the modern financial system may require balancing the interests of the government, financial stability, and the rights of individuals in ways that the Founding Fathers could not have anticipated.

Ultimately, interpreting the Founding Fathers' positions on specific modern-day issues requires a careful study of their writings and a consideration of the historical context in which they lived."

Note: The answers are copied exactly from those given to me by ChatGPT

PS. https://subprimeregulations.blogspot.com/2013/11/have-risk-weights-of-current-bank.html

Here my many other questions to ChatGPT – OpenAI on bank regulations

Before the debt ceiling is lifted, which it must be, Congress must dare to at least pose a question.

Note 1988: "Assets for which bank capital requirements were nonexistent, were what had the most political support; sovereign credits. A ‘leverage ratio’ discouraged holdings of low-return government securities” Paul Volcker

A letter in the Washington Post

Before the debt ceiling is lifted, which it must be, Congress must dare to at least pose a question.

In much of Peter Orszag’s Nov. 22 op-ed, “GOP threats to weaponize the debt limit are dangerous,” one can agree with his conclusion, but when he mentioned, “The evolution of debt is also influenced by the economy, market interest rates and other factors, but those are mostly outside the control of policymakers,” he omitted vital aspects. Let me explain it with a question:

What would the United States’ public debt be in the absence of regulatory subsidies, such as bank capital requirements with decreed risk weights of zero percent against federal government debts and 100 percent against citizens’ debts; copious amounts of Treasury purchases by the Fed with quantitative easing programs; and the preaching by modern monetary theory fans that has definitely promoted a dangerous lackadaisical attitude when discussing the limits of public debt?

Yes, Congress must approve increasing the debt level. It’s too late to do otherwise, but to do so without even trying to answer that question would be to irresponsibly kick the debt can forward and upward with disastrous consequences.

And, by the way, the Supreme Court should look at what the Founding Fathers might have thought about the aforementioned risk weights.

PS. The links displayed above are the ones placed on the web by the Washington Post

http://unsustainabledebtsustainability.blogspot.com/2022/11/before-debt-ceiling-is-lifted-which-it.html

Our feeble democracies need to be re-launched on the web

The real effective distance between congressmen and senators to their constituency is way too long. If each one of these has to answer to more than a couple of hundred of citizens they are really not answering to anyone.

Every couple of hundred citizens should have the right to appoint a citizen delegate, and these delegates should be the one to vote on what congressmen and senators propose.

Every single citizen should receive real time information on how his delegate has voted. That would help to hold them accountable.

That would inject a lot of dynamism and real separation of powers into our feeble democracies.

If we want a promised a “representative democracy” “dependent on the people alone,” this has to be the modern way to get it.

If a Hitler imprisoned my grandchild, could he hope to be liberated by the Americans, like my father was?

I ask this because:

Seeing the number of safety instruction posted on the pool where I live in Maryland.

Hearing rumors about sport-teams being sued for allowing players to take risks

Seeing, in the Home of the Brave, how they are using sissy bank regulations, which require banks to hold more equity when lending to “the risky” than when lending to “the safe”.

And seeing the development of the taste for drones... and distaste for boots on the ground.

I have enough reasons to get nervous about America, slowly but surely, getting to be too risk-adverse for its, and for ours, the rest of the world's, own good.

June 1940, my father was on that train which carried polish prisoners and which was the first train to arrive to Auschwitz. He had the number 245 stamped on his arm for the rest of his life. In April 1945, 70 years ago, he was liberated from Buchenwald, by American boots on the ground.