"Substantial flaws still remain" in Basel II, says CSFB's Ervin

"While there is much to admire in the new [Basel II] rules, there are also many elements that raise serious concern," said Wilson Ervin, a managing director and head of the firm's strategic risk management department of Credit Suisse First Boston, who also spoke on behalf of the trade group, the Financial Services Roundtable at congressional hearings in Washington DC on February 27.

Ervin raised four “macro” criticisms of the proposed Basel II rules. First, he said the new rules were “too complex, too costly, and too inflexible to provide a robust, durable framework for bank supervision going forward”. He warned that a side-effect of the proposals could be the “effect of freezing the development of good risk management, and locking it into an ‘early 2000’s’ mindset”. The hearings were before the Subcommittee on Domestic and International Monetary Policy, Trade, and