The Basel Committee’s Board of Governors recently agreed to changes in bank capital and liquidity requirements to be introduced in November under Basel III. At the time of the agreement, Germany opposed them as not easing up enough. It appears the US isn’t liking it either— for opposite reasons.
One big takeaway from the Basel changes is that they respond to concerns about introducing tough new rules in the early phases of economic recovery.
This is not sitting well with Senator Chris Dodd and Representative Barney Frank, since Dodd-Frank included pre-ordained adherence to presumed stricter Basel rules. They thus plan to hold hearings. The concern, expressed by Senator Ted Kaufman, is that it will result in “weak and perhaps even nonbinding provisions that provide credit to banks for holding forms of capital that have little or no value in absorbing losses.”