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Federal Reserve Board Chairman Ben Bernanke sought to assuage fears by the biggest banks in the United States that they may have to follow European counterparts in raising capital standards to 9% by mid-2012.
November 2 -
Last week, the Basel Committee on Banking Supervision announced plans to oversee how each country implements the new capital standards. But such a step may signal problems before the final rules are even adopted.
September 30 -
International regulators have agreed to keep a proposed capital surcharge on the world's most systemically important firms despite concern among institutions that the extra fee will be excessive and crimp lending.
September 28 -
American banks aren't the only ones protesting a capital surcharge on systemically important institutions.
September 8
WASHINGTON — Federal Reserve Board Gov. Daniel Tarullo said Friday that U.S. regulators plan to make recommendations to revise a global liquidity framework under the Basel III accords.
In a speech, Tarullo said the Fed will be working with other U.S. banking agencies to make changes to the currently proposed liquidity coverage ratio in the coming months.
Under Basel III, firms are now required to meet both a short-term and long-term liquidity requirement for the first time. The LCR is designed to meet short-term liquidity needs typically in a 30-day period, while the Net Stable Funding Ratio is used for longer-term needs. They take into effect 2015 and 2018, respectively.
While the financial crisis proved the necessity of a robust liquidity requirement, there have been a number of concerns raised in how to define and calibrate the new ratios. The Group of Governors and Heads of Supervision initially agreed to delay implementing the liquidity rules, instead opting for an "observation period" to conduct further work.
But the Basel Committee on Banking Supervision recently agreed to accelerate the LCR review to make changes well ahead of the rule taking effect.
Among the changes Tarullo anticipates that U.S. regulators will suggest include a "recalibration of certain deposit run-off and commitment draw-down rates," as well as adjustments made to the buffer definition in order to emphasize the liquidity characteristics assets.
"We are also examining how the regulations might be best applied during liquidity stress events to maximize the benefits for financial stability," said Tarullo. "Several other possible changes are also under consideration, including altering the LCR so as to limit certain arbitrage opportunities that appear possible from its current structure."
