The Independent Community Bankers of America met with Federal Reserve officials Friday and expressed concern that proposals to implement Basel III capital standards would impose excessive burdens on community banks.

The association is worried about new risk weights, particularly on mortgages, certain types of commercial loans and nonperforming loans and recommended that community banks have the option to continue using Basel I risk weights.

The ICBA told Federal Reserve Gov. Elizabeth Duke and other senior officials that mortgage-servicing rights should continue to be included as Tier 1 capital and that the cap on the inclusion of allowance for loan and lease losses as capital should be raised.

“Community banks are commonsense institutions that maintain the highest capital levels in the banking industry — they should not be subject to the same complex standards required of larger and riskier financial firms,” ICBA Chairman-Elect Bill Loving said.

Community banks, Loving said, did not engage in the reckless behavior that contributed to the crisis and subsequent economic downturn.

In June, Amherst Securities Group said the three Basel-inspired proposed capital rules are "potentially important and very positive for the RMBS market.”

“The proposals are more rational than either the ratings-based approach originally scheduled to go into effect in 2013, or the market capital risk rules initially proposed in December 2011, and are an unambiguous positive for the market,” analysts said.