Summertime, and the livin' ain't easy

Every summer, there seems to be a Basel II melodrama, and this year is no exception. Although the Basel Committee on Banking Supervision published its International convergence of capital measurement and capital standards: a revised framework last summer, it was by no means finished.

Indeed, US regulators discovered, after they did their own QIS4, that something is out of kilter, because capital plummeted for many banks. What to do? They refrained from publishing the draft US regulatory rules and picked up the hotline to Brussels.

But things aren't much easier there. MEP Alexander Radwan, the rapporteur for the Capital Requirements Directive, is frantically trying to compress 887 amendments so it will pass out of the committee stage in mid-July. The trading book bits – which haven't been finalised by the Basel Committee yet, either – will be hastily tacked on before the CRD goes to the full EU Parliament.

Now, I am a huge fan of Basel II. It is a document that tries very hard to do something that is quite difficult. But this last-minute rush to push various bits through is no good. So far the Basel II process has been one of the most transparent and interactive rule-making processes the financial services industry has experienced.

Would it be so bad if the framework were delayed for another six months? Hardly. It will happen, but it should happen properly, with dignity and transparency. Basel II deserves more.