U.S. banks risk falling behind their foreign counterparts unless the Basel II capital proposal is adopted quickly, two senators told banking regulators last week.
"Disagreements among regulatory agencies must not further delay Basel II implementation in the U.S.," Sens. Charles Schumer, D-N.Y., and Mike Crapo, R-Ind., wrote in a letter dated Thursday.
The lawmakers, both members of the Senate Banking Committee, noted that the United States is not slated to adopt the Basel II rules until 2009 but that some countries are already installing them this year and many others plan to move forward next year.
Sen. Schumer released a report in January that urged regulators to protect capital while ensuring that banks retain the ability to compete with their foreign counterparts.
"We are writing to urge you to find this middle road and would ask that you consider swiftly adopting the Basel international text with the added safety of the leverage ratio during the transition period," the senators wrote.
They also asked the regulators to abandon a provision that would give the agencies greater power if aggregate industry capital drops below 10%. The lawmakers said this rule would "introduce regulatory cost and uncertainty without contributing in a meaningful way to the safety and soundness of our system."
