FDIC approves Basel II
Capital floors will be kept until the agencies prove the new rules can work, says Bair
WASHINGTON, DC – All four US regulators have now approved the final rule implementing the advanced approaches of the Basel II capital accord, with the Federal Deposit Insurance Corporation (FDIC) adding its stamp to the rule yesterday.
The FDIC has been one the sharpest critics of the Basel accord and has lobbied hard to ensure the leverage ratio is kept in place. Sheila Bair, chairman of the FDIC and a long-time advocate of the leverage ratio, says: “We have agreed, by regulation, not to allow any bank to exit its transitional risk-based capital floors unless and until the agencies publish a study giving the new rules a clean bill of health, or unless identified defects are remedied. If any agency allows its banks to exit the floors in a way that departs from this consensus approach, the rule requires that agency to publish a report explaining its reasoning.”
Bair is also a proponent of ensuring smaller US bank are not unduly disadvantaged by the larger banks’ adoption of the advanced approaches. The agencies are continuing to work on a proposed rule that would provide a standardised approach for smaller and community banks.
“It is very important for smaller banks that want to implement the standardised approach to have enough lead time to do this on a timeline parallel to the advanced approach. It is also important to note that the NPR [Notice of Proposed Rulemaking] will include a question for comment about whether the large banks, which we are today requiring to use the advanced approach, should be able to use the standardised approach instead,” Bair says.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
FRTB start dates must align globally, says European Commission
Lawmaker could trigger delay to market risk rules in Europe if US implementation drags on
Fed green lights more capital relief trades
Five US banks authorised to issue repeat credit-linked notes backed by financial guarantees
Basel III endgame: why moving fast might prove better for banks
Republicans are pushing for reproposal, but a rapid finalisation may prove less far-reaching
Isda pushes to ‘decouple’ Simm calibration from model changes
Emir 3.0 prompts effort to separate risk-weight revisions from methodology updates
Basel war on window-dressing may smooth liquidity, at a price
Changes to G-Sib charge could curb year-end repo volatility, but also cut balance sheet capacity
One year on, regulators still want a cure for bank runs
Broad support for higher outflow assumptions on uninsured deposits, but that won’t save insolvent banks
Watchlist and adverse media monitoring solutions 2024: market update and vendor landscape
This Chartis report updates Watchlist monitoring solutions 2022 and focuses on solutions for sanctions (name and transaction) screening and monitoring adverse media and its related elements
Basel Committee reviewing design of liquidity ratios
Focus on LCR and NSFR after Silicon Valley Bank and Credit Suisse, but assumptions may not change
Most read
- Too soon to say good riddance to banks’ public enemy number one
- Breaking out of the cells: banks’ long goodbye to spreadsheets
- Basel III endgame: why moving fast might prove better for banks