« Washington regulators unite to win backing for Basel II in the US |
Main
August 15, 2006
Basel II NPR could ask for comment on simpler methods; FDIC's Bair hopes for agency agreement before Congressional hearings
WASHINGTON, August 15 – A top US banking regulator hopes that federal agencies will ask for comment on the possibility of allowing US banks the option of using simpler approaches to risk measurement in forthcoming proposals on implementing the controversial Basel II global bank safety rules in America.
"I think everybody can show some flexibility because we aren't making the decision at this point," Federal Deposit Insurance Corporation (FDIC) chairman Sheila Bair said in an interview with the Dow Jones Newswires service which was published yesterday. There will be a four-month period for comment by lawmakers, bankers and other interested parties when the proposals are published as a final version of a notice of proposed rulemaking, or NPR. After the comment period, the agencies will decide on their final version of the rules, which are intended to come into operation in January, 2009.
Bair, who also said the federal banking supervisory agencies are trying to reach a consensus on the Basel II proposal before Congress holds a hearing on the issue next month, was commenting on recent demands that US proposals on Basel II should be eased.
Four big US banks, backed by state banking supervisors and the American Bankers Association, the leading industry trade body, have asked the federal supervisors responsible for developing the Basel II rules in the US to allow banks the choice “of alternative methodologies, including the standardised approach”.
The request challenges a fundamental principle adopted by US regulators some four years ago in their initial plan for Basel II. This is that the small number of large, internationally active US banks that would operate under Basel II would be permitted to use only the most advanced approaches to assessing their credit and operational risks. The standardised approach is the simplest of the three methods of assessing credit risk under the complex, risk-focused Basel II bank capital adequacy rules. It’s described as an improved version of the approach used in the current, and simpler, Basel I international capital rules that date from 1988.
Posted by sturmaine at August 15, 2006 04:38 PM
Post a comment
