[lbo-talk] Basel proposal: countercyclical capital buffers

Michael Pollak mpollak at panix.com
Tue Jul 20 06:15:28 PDT 2010


[Banks really hate it, which is always a good sign]

http://www.ft.com/cms/s/0/30b34430-90fe-11df-b297-00144feab49a.html

July 17 2010 Financial Times

Basel Bank capital buffer plan unveiled By Sharlene Goff and Patrick Jenkins in London

The financial industry on Friday hit out at plans by international regulators to force banks to hold more capital if signs emerge that a new credit bubble is forming in the economy.

In an early indication of how new capital and liquidity rules could work, the Basel Committee published a proposal on "countercyclical capital buffers", a tool it plans to introduce to strengthen the global banking industry.

Such a buffer would force banks to increase capital when excess credit was building up in the market, a move that would be a brake on lending and create a greater cushion to protect against financial difficulty.

However, banks and experts questioned the logic of introducing more rules that risked distorting the market....

<end excerpt>

Michael



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