WASHINGTON — Banking regulators issued a 36-page proposal last week, and while it never mentioned the words "Basel II," it amounted to a first step toward reworking the tortured capital accord.

Last week's proposal would correct a flaw in the Basel accord, which did not require banks to hold capital against off-balance-sheet assets, by forcing them to raise potentially hundreds of billions more in capital against such assets when an accounting change takes effect in January.

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