ABA supports NPR and Basel 1A

The American Bankers Association (ABA) has commended banking regulators for continuing the dialogue on implementing Basel II. "It is good to know that we are proceeding in the context of broad agreement on the goals for the new standards. The task now is to ensure that the proposal, especially the new concepts introduced in the draft rule, will achieve the strong, flexible, up-to-date capital program that lies at the heart of the Basel II effort,” the Association posted on its website.

The ABA wants the US to proceed with capital reform, as current capital rules are becoming obsolete. “Markets and risks have changed, and the ability of banks to recognise and manage risks is much better today. Until our capital rules catch up with these new realities, bank capital will be used inefficiently,” read the statement. Without updating the rules the association believes banks, customers and the economy will suffer.

The ABA also stated that capital reform must include every bank, and that progress on Basel II “must go hand-in-hand with addressing capital rules for all banks”. The ABA expressed support for regulatory efforts to expedite the Basel IA rules so the entire capital reform program for the industry may be evaluated together.

“Just as the US Basel II rules are needed to maintain international competitiveness of our globally active banks, an effective Basel IA option can and must be developed to maintain competitive balance in capital standards for all banks," the association said.

BaselAlert.com