Basel Committee on Banking Supervision

Subterms

    Latest story

    113 Shares149 Views

    After Fierce Lobbying, Regulators Soften Proposed Rules on Banks

    by

    A top Federal Reserve official said that blowback to proposed rules on capital requirements led him to “relearn the lesson of humility.”Regulators on Tuesday watered down an effort to layer new oversight on banks to protect against losses, which led to a fierce outcry from big banks and their lobbyists.The new standards, known as “Basel III endgame,” had been debated for years. They would have raised the amount of capital banks were required to maintain, funds intended to ensure stability and provide a financial cushion. Banks argued that the stricter rules would force them to crimp lending.The newly proposed rules will largely erase extra requirements on banks with between $100 billion and $250 billion in assets. It also slashes in half the capital reserve requirements on the largest, so-called systematically important lenders.Michael S. Barr, the Federal Reserve vice chair who is no favorite of the bank lobby, acknowledged the blowback in a speech laying out the changes: “Capital has costs, too,” he said in a speech at the Brookings Institution in Washington. In its statements pushing against the rules over the years, the banks’ main lobbying organization has said that “capital isn’t free.”“Life gives you ample opportunity to learn and relearn the lesson of humility,” Mr. Barr said.This is a developing story. Check back for updates. More

    More stories

    • 113 Shares149 Views

      in Elections

      Fed Chair Powell Signals a Retreat on Banking Rules

      by

      The Fed chair said regulators could scale back or rework a sweeping capital-requirements proposal that Wall Street has been fighting for months.Jay Powell, the Fed chair, stunned Wall Street yesterday with an apparent U-turn in bank regulation.Kenny Holston/The New York TimesJay Powell’s surprise For months, Wall Street C.E.O.s have been complaining bitterly and lobbying against the prospect of higher capital requirements, which would require them to keep more money on hand and would lower their profits. It appears they have scored a big win.Jay Powell dropped the bombshell in his testimony before the House on Wednesday. Markets were still digesting the Fed chair’s go-slow comments on interest rate cuts when he signaled that proposed new rules to force lenders to beef up their books would be scaled back, or reworked.“I do expect that there will be broad and material changes to the proposal,” he said.The capital rules, known as the “Basel III Endgame,” would apply to the largest banks. They would have to set aside a bigger emergency cushion to soak up losses stemming from shocks like the bank run last year that led to the collapse of Silicon Valley Bank and prompted a wider crisis.But the proposals have come under fire from bank chiefs, industry lobbyists, Republican lawmakers and even some liberal members of Congress, who fear that a mandate to set aside billions to fight the next potential crisis could feed another one.Critics fear that Basel III would crimp lending just as banks grapple with upheaval in commercial real estate. Lenders face a looming “maturity wall” of as much as $1.5 trillion in commercial real estate loans set to come over the next two years.That risk came into blaring focus during Powell’s testimony. The stock price of New York Community Bank, a Long Island-based lender with a mountain of souring real estate loans, plummeted on news it was seeking emergency funding. (More on that below.)We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More