Bies justifies backing Basel I for smaller banks in the US

Federal Reserve governor Susan Schmidt Bies has justified making only the largest US banks implement Basel II, by stating that smaller banks would have to spend millions to set up an appropriate risk system.

Additionally, small banks in the US rarely offer large and complicated risk products. “The cost-benefit-analysis showed that it was not worth it,” Bies said at the Global Association of Risk Professionals’ Basel II conference in Barcelona. One question directed at Bies was: “Why is Basel I being tweaked for small banks when you have acknowledged Basel II is far better for risk management? Can you explain this to the people who look to the Fed as standard-setters?” Bies responded that that