WASHINGTON — The long-sought simplified version of Basel II regulators unveiled Thursday is designed for the vast majority of financial institutions, but it is already dogged by questions over whether it is simple enough.

Regulators, including Federal Reserve Board Chairman Ben Bernanke, are hoping many small banks will adopt the standardized approach, which would make banks' capital requirements more commensurate with their risk.

But community bank advocates are raising concerns that the voluntary plan offers too few benefits, would keep small banks at a competitive disadvantage against the largest ones, and remains overly complex.

In particular, the advocates cited a requirement that would tie a bank's capital to its operational risk. Under the advanced approach of Basel II, which is mandatory for the nation's largest banks, lower capital charges in other areas would offset the higher capital for operational risk concerns. Under the standardized approach, that is not the case, community bank representatives said.

"That means that we again have this competitive disparity between those companies that use the advanced approach and those companies that use the standardized approach," said Christopher Cole, senior regulatory counsel for the Independent Community Bankers of America. "A lot of our guys will just stick with Basel I, because they see no reason to try to compete on a capital level. They're comfortable with their capital levels and not looking to reduce their risk-based capital, particularly in this kind of environment."

The standardized framework, proposed by the Federal Reserve Board and the Federal Deposit Insurance Corp. (other regulators are expected to follow suit shortly), would expand risk buckets for most institutions to 16, from five. Bankers had complained that an earlier version intended for small banks, dubbed Basel IA, was too complicated, in part because it used eight buckets. "If it's so complex that a lot of our community banks will find it difficult to use it … then that's going to be an issue," Mr. Cole said.

Some said, however, that staying with the current Basel I approach was not a good option for banks.

Small banks "can argue" against the new capital regime, "but this is going to happen," said Karen Shaw Petrou, the managing partner of Federal Financial Analytics Inc. "They're already being forced bank by bank to raise lots of capital, both by the regulators and by the market... Basel I may provide a little safe harbor, but I think it's small, rocky, and temporary."

The proposal would apply capital levels more directly to risk exposure than current requirements. In addition to operational risk, the measure addresses how collateral and guarantees can mitigate risk, uses loan-to-value ratios to measure the capital risk of residential mortgages, and increases the capital requirements for off-balance-sheet exposures.

"The increased risk sensitivity of the standardized framework is aimed at both enhancing safety and soundness for the wide variety of institutions that will not be adopting the advanced approaches of Basel II and fostering competitive equity for these institutions," Gov. Randall Kroszner of the Fed said at an open meeting, where the Board of Governors approved the plan and a 90-day comment period. "Recognizing the diversity of banking organizations in the U.S., we want to provide these banks with the option of using a more updated capital framework without unduly increasing regulatory burden."

After the meeting, he said regulators would seek comment on the impact of accounting for operational risk in capital requirements.

"We have a number of questions around the operational risk measure," he said. "This is something that we're certainly open to comment on and trying to improve if we can."

But the plan is also under fire for other reasons. Unlike the current capital accord, the advanced and standardized approaches of Basel II would put a bigger emphasis on external rating agencies to measure the riskiness of certain assets. But the credit rating agencies have come under fire for underestimating the riskiness of securitized subprime assets before and during the housing crisis.

A proposal the Securities and Exchange Commission issued Wednesday called into question investors' dependence on the major rating agencies.

Regulators said they are watching the issue closely. The Basel II document "has a very serious dialogue and discussion that notes some of the concerns of external ratings and specifically asks for comments as to whether there are alternatives or enhancements to external ratings that might address some of these concerns," said Jason Cave, an associate director of capital markets in the FDIC's division of supervision and consumer protection. "Everybody is sort of going in the direction of saying, 'Maybe we need to go back to some basics and think about some of these other approaches.' "

But observers said that at this point regulators do not have a better option than using the rating agencies. "What we're going to see is a two-part process in which the regulators will move and finalize the standardized option as quickly as they can, with the rating agency treatment more or less as it is — because they're not sure what else to do, and they need to finalize this as quickly as possible," Ms. Shaw Petrou said. "But at the same time, and in the context of the SEC rulemaking, this is a broadscale banking agency thing. They'll be looking at this and making changes."

Some industry representatives supported adoption of the plan, saying concerns about the rating agencies are less of an issue for small banks, which the proposal targets.

"It's not clear how important any issues related to rating agencies are to this rule, given that very few banks — aside from the very largest that are going to be on the advanced approaches — have any debt that's rated," said Rob Strand, a senior economist with the American Bankers Association.

The plan also would serve as a useful guide for midsize institutions that may choose the advanced version of the accord one day, Mr. Strand said. The standardized approach will allow banks to "phase up from Basel I into at least one version of the Basel II rules, heading toward the advanced approaches," he said.

Mr. Strand also said he doubted the proposal would prove too complicated for institutions to use, since third-party vendors — which specialize in helping banks with regulatory compliance — will integrate the new accord with their products as more banks implement it. "Once third-party vendors integrate the standardized approach options into their standard product, then it's likely that an increasing number of banks will consider this," he said.

The largest institutions are also interested in the proposal, which asks whether they should be allowed to use the standardized approach in lieu of the more complicated approach. Large banks have asked for such an option, but been rebuffed by regulators.

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