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April 13, 2010

Banks Are Mad, and They Are Mad At Basel

Posted by David Zaring

The Basel Committee on Banking Supervision is probably the easiest venue in which to implement a crackdown on banks, and this is the week when banks get to file nastygrams in response to its latest proposals. I could note - and regular readers of this blog (or, heck, my articles) will recall that I have noted - that all this notice and comment process on a global level is entirely new, an unprecedented development in international law and a real check on/source of power for domestic agencies like the Treasury Department. But instead, I'll focus on the bleeding edge; it's worth pointing you to the FT roundup of banker criticisms of the rule, soon to be memorialized in pixels filed at Basel, and its summary of the rule that is pending:

The liquidity proposals come in two parts: one, known as the Bear Stearns rule, requires banks to have enough liquid assets on hand to survive a 30-day crisis, while the other, nicknamed the Northern Rock rule, requires banks to have stable long-term funding, favouring deposits and heavily disfavouring wholesale sources. It is the latter rule that has attracted most criticism. "It is an attempt to micro-manage banks' asset portfolios," complains one regulatory expert.

Via Felix Salmon.

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