Preparing for the worst

In the US and Europe, small and medium-sized banks greeted the publication in January of the Basel Committee on Banking Supervision’s proposals for a new Accord on bank regulatory capital with a collective moan. The new rules will impose significant costs for banks that wish to comply with the Accord’s foundation and advanced internal ratings-based (IRB) approaches.

While the US Federal Reserve has promised to soften the blow for US small and medium-sized banks by issuing special rules for t