US departs from Basel II
WASHINGTON, DC – US regulators announced plans to depart substantially from both the Basel II framework timetable and text in September and early October. The unexpected results of quantitative impact study four and domestic political pressure combined to force regulators to delay the year of parallel running for the advanced credit and op risk frameworks until 2008. Regulators aren't expected to produce a notice of proposed rulemaking on Basel II implementation now until Q1 2006.
Other changes to the framework implementation were also incorporated into the timetable announcement. US institutions adopting the Basel II-based capital rules will now be subject to a minimum three-year transition period during which the agencies would apply limits on the amount by which each institution's risk-based capital could decline with the application of Basel II. These limits would be
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