Banking Regulators Look to Ease Restrictions
- Posted on September 6, 2011 at 4:21pm by
Becket Adams
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In a recent report carried by Fox Business, it appears that the Basel Committee is going to reevaluate one of its most recent, and judicious, regulatory provisions.
For those unfamiliar with the Basel Committee on Banking Supervision (BCBS), it is a group made up of banking supervisory authorities that was established by the central bank governors of the Group of Ten countries in 1975.
Their stated objective is to “enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide.” (Whether or not that is being effectively accomplished is up for debate).
The Committee also frames guidelines and standards in different areas—some of the better known among them are the international standards on capital competencies, the “Core Principles for Effective Banking Supervision” and the Concordat on intercontinental and international banking supervision.
The Committee is “global” in that it boasts of memberships from Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong, India, Indonesia, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.
With their credo clearly stated (and with an idea of the number of stakeholder’s involved), we are brought back to the initial report of their seemingly imprudent decision reversal.
Recently, because of a manifestly weak global economy, the Basel Committee convened to discuss what actions should be taken to help undo the damage done and how to best prevent it from happening again. They came up with Basel III, a new global regulatory standard on bank capital “adequacy” and liquidity.
The idea is that Basel III will strengthen bank capital requirements and introduce new regulatory requirements on bank liquidity and bank leverage. These new regulations would make the bank’s dealings with investors and consumers safer than it has been in past years.
However, there is one regulatory provision that they intended to impose on the banks that they are now looking to undo. They may soften the technical definitions in the “liquidity coverage ratio,” which essentially requires banks globally to hold enough assets to withstand a 30-day run on their funding, the Financial Times reported Monday citing people familiar with the discussions.
Sounds like a good idea, right? Banks should hold enough assets that, in the event of a crisis, they have a 30-day window in which they can properly address the issue(s).
Instead, banks have complained loudly that the new Basel III standards on liquidity, to be implemented in 2015, would force them to sharply curtail lending to consumers and businesses.
Now the council is thinking of abandoning the idea.
So instead of only working with what they have, the banks have clearly stated that they would like to continue using what they do not have so that they can keep lending to businesses and consumers.
What could possibly go wrong?
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Rastus McGee
Posted on September 8, 2011 at 9:31pmWell, ask any appraisor dealing with the new govt mandated formats for appraisals, hardly any loan officers, realestate agents , and underwriters even know about them. much less the poor buyer whos paying for it! HUGE backlog coming folks as the whole industry tries to figure out what the hell a Q2 answer is when looking at an appraisal! Hmm… sept 1999 Clinton admn mandated 40% of Freddie & Fannies portfolio be in subprime loans Folks that is when we headed for the crapper…..unfortunatly we are all being used for toilet paper now!!! While being told that it’s all evil proffitering private enterprise that to blame….
Report Post »AR_OR_AK
Posted on September 7, 2011 at 9:47pm“OH PLEASE DON’T throw me in the briar patch!” What a crock!!! The reason the economies are collapsing is cos the banks only have to have 10% of a loan on hand. The other 90% COMES FROM THIN AIR!! The only way to make banks too big to fail is for them to have 100% of a loan on-hand. PLEASE read “The Creature From Jekyll Island” to see how the Fed really works and to see what/why stuff is happening the way it is. The system is flawed and paper money has failed EVERY SINGLE TIME IT’S BEEN USED IN HISTORY.Why should the dollar be different? Ameros anyone…?
Report Post »Simple Skeptic
Posted on September 8, 2011 at 10:40amThat’s crazy talk. If banks keep 100% of loan values, then there is no purpose for banks. To keep it very simple, let’s say someone deposits $100 and someone else wants to borrow $90. Well that leads us to believe in this simple scenario that the bank will only “hold” $10 of the depositors original $100. Let’s further the scenario such that the original depositor all of a sudden wants to take his money out to buy a new pair of shoes. In this simple scenario, the bank would have to call the loan in order to give the depositor all of his/her money at that point in time. This line of thinking would take us back to an all cash society…which I’m not necessarily opposed.
Report Post »santramir
Posted on September 7, 2011 at 7:35pmit is up to you not to let this be the time of america’s agony .. .. .. : http://www.realzionistnews.com/?p=654
Report Post »Beneupho
Posted on September 7, 2011 at 3:00pmHey, let’s just let the international community run our American banks. I’m sure there are some out of work Greek bankers that could do a heck of a job.
Report Post »gmoneytx
Posted on September 7, 2011 at 1:06pmLooks like Marxine Waters would get her way then, threatening banks taxing them out of existance…someone put her out of our misery PLEASE!
Report Post »cntrlfrk
Posted on September 7, 2011 at 9:55am”
Every time I read about the ‘globalization’, whether it be with the U.N. gaining power, or global banking systems like this, I think of the quote:
“If we lose freedom here, there is no place to escape to. This is the last stand on Earth.”
–RONALD REAGAN
One of these days (if we aren’t already there) we are going to wake up and realize that the United States, and it’s government and borders are meaningless, and all of our powers are granted to us from global organizations.
.
Report Post »Windsong
Posted on September 7, 2011 at 3:47amImagine that!
Report Post »mullet
Posted on September 7, 2011 at 9:35amThe banking system is built on trust. Without the banks expanding the money supply by lending many times what they have in deposits a central bank would be completely in charge of monetary supply. This would never work as a central bank can only react to market conditions, causing a greater swing than had it been left alone.
Regulations are not the panacea they are supposed to be. Tighter regulations on banks only inhibit an economy’s recovery, as is the case currently.
Report Post »longun45
Posted on September 7, 2011 at 12:33amI am going ot have to find a community bank, one that is not tainted by the fed.
Report Post »Dangerous Dave
Posted on September 7, 2011 at 12:24amI hope I’m wrong, but I believe the end game for the dollar and the banking system is in sight. The banks and the central banks have painted themselves into the corner, and that room, and the whole house, is on fire. How much the banks are required to hold in reserve will only hasten or slightly delay the day of reckoning.
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