U.S. Moves Forward on Basel III

U.S. banks almost $60 bln short of proposed capital buffers, Fed estimates.

U.S. regulators moved ahead with implementing global bank capital rules, releasing language for measures proposed in previous years, even as the international body overseeing the framework makes adjustments.

The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency yesterday published a revised version of rules that were decided in 2009, dictating for instance how much capital banks need to back mortgage-linked securities. The regulators also proposed another set of rules that will translate for U.S. lenders a more fundamental overhaul of the capital regime drawn up by the Basel Committee on Banking Supervision in 2010.

‘Harsher’ Rules

Wayne Abernathy, an executive vice president at the American Bankers Association, said the rules as drafted will affect every U.S. bank and called that one of the surprises in the nation’s “coming-out” party for Basel III.

‘Good Governance’

“We cannot declare with these proposed rules, ‘mission accomplished,’” said Fed Governor Sarah Bloom Raskin. “Capital requirements do not compensate for good governance and appropriate risk management by the institution.”

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