FED passes Regulation Stricter Than Basel III Norms....

[FreckledFuzz]

http://seekingalpha.com/article/1547282-fed-passes-regulation-stricter-than-the-basel-iii-norms-are-the-u-s-banks-at-a-disadvantage

 

 

 

 

 

 

The Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) voted for the final rule on the implementation of Basel III brought in by the Federal Reserve Board (the Fed). A significant aspect of the new rule includes the higher leverage ratio for the global systemically important financial institutions (G-SIFI), the minimum 4.5% CET1 ratio-Tier 1 common/risk weighted assets, also known as the capital conservation buffer, the inclusion of off-balance sheet items in the definition of asset and retention of the current risk weightages on mortgages. In the article below, I have tried to consolidate an analysis on what these ratios imply and the effect expected on the banking industry and the U.S. economy.

Basel III norms were laid down in 2010, and the 26 committee member nations asked to enact domestic regulations to carry out the reforms. The domestic regulations were to be phased in through 2019. The meeting of the Financial Policy Committee of Bank of England (BOE) in March raised concerns on the adequacy of minimum capital requirements laid down in Basel III. U.S. Republican Senator David Vitter and Democrat Sherrod Brown also proposed a bill that comes down strictly on larger banks. The bill has not been enforced yet, and the likelihood of that happening is low.

What led to the stricter rules?

There is general acceptance that larger banks generally already meet the Basel capital requirements. For instance, if one looks at the leverage ratio, analysts assess leverage ratios at 4.6% for Morgan Stanley, 5.1% for Citigroup, 5.3% for JPMorgan Chase, 5.7% for Goldman and Bank of America Corp, and 7.5% for Wells Fargo. As pointed out by Fitch, "We believe the banks we rate are well positioned and capitalized to cope with the implementation of the Basel III rules."

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[calkid11]

ANOTHER GOOD POST ,GOOD FINDS...GO RV