Reuters: Regulatory News: UPDATE 1-Fed to consider Basel III rules next week

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UPDATE 1-Fed to consider Basel III rules next week May 30th 2012, 16:42 Wed May 30, 2012 12:42pm EDT * Fed to meet June 7 on whether to propose capital rules * Basel III capital rules are at core of financial reforms * Banks balking at extra capital buffer * Fed to also vote on capital rules related to trading books By Dave Clarke WASHINGTON, May 30 (Reuters) - The Federal Reserve is scheduled to vote next week on a highly anticipated proposal for implementing an international agreement on higher capital standards for banks, known as Basel III. The Fed announced the June 7 meeting, which will be open to the public, on its website on Wednesday. The U.S. central bank is expected to put the proposal out for public comment. The agreement is the cornerstone of efforts by international regulators following the 2007-09 financial crisis to make sure that the global banking system is more resilient. The accord, which is to be phased in from 2013 through 2019, will require banks to maintain top-quality capital equivalent to 7 percent of their risk-bearing assets. Banks have mostly agreed this minimum level is necessary. On top of that, however, global "systemic" banks may have to hold up to an additional 2.5 percent buffer. This provision is likely to hit the largest international financial institutions such as JPMorgan Chase & Co, Goldman Sachs Group Inc and Deutsche Bank AG. The surcharge has been the source of much consternation in the banking industry, with executives and their lobbyists arguing it goes too far and will hurt their ability to lend. Regulators and other supporters of the standards have dismissed these complaints, saying the banks are overstating the lending impact and that world economies will benefit from a more stable financial system. The surcharge on large banks is set to be phased in between 2016 and 2018. The Fed announced on Wednesday it also plans to vote on a final rule implementing new capital standards regarding risks posed specifically by banks' trading books. Link this Share this Digg this Email Reprints

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