Tag Archives: Basel Accords

Federal regulators announced last week they have finalized a rule with regards to the "liquidity coverage ratio" (LCR) of large financial institutions. The final rule is nearly identical to the rule that was originally proposed with a few changes based on public comments.

Federal regulators announced a proposal Tuesday to double the standard Basel III leverage ratio for the "largest, most systemically significant" banks. The proposal would also require covered bank holding companies to maintain a tier 1 capital leverage buffer of at least 2 percent above the minimum supplementary leverage ratio requirement of 3 percent, for a total of 5 percent, the regulators stated. Currently, the proposed rule would apply to eight banks.

The Federal Reserve Board announced its approval of a final rule to implement the Basel III regulatory capital reforms and other changes required by the Dodd-Frank Act.

The goal of attracting private capital into the mortgage market is at the center of discussions throughout the industry and the government. Thus far, efforts by the Federal Housing Finance Administration (FHFA) and other federal agencies to provide incentives for the creation of a vibrant private mortgage securitization market have been largely unsuccessful, according to Fitch Ratings. However, the ratings agency does see some promise in a couple of FHFA's goals for this year.

After announcing Monday the sale of nearly $306 billion in mortgage servicing rights (MSRs) on 2 million loans, Bank of America might be looking to unload a little more. Reuters first reported Tuesday that the bank is planning to sell rights on at least another $100 billion of mortgages. BofA is likely to announce more MSR sales in the next several weeks, according to two unnamed sources who spoke to Reuters. Sales of servicing rights have become more prevalent as costs rise and servicers fall to bankruptcy, leaving hungry institutions to purchase their MSRs.

U.S. banks may have received an extension on their deadline to implement Basel III regulations, but that isn't stopping the global community from introducing reforms at the start of 2013. While a handful of jurisdictions--including the European Union, Korea, Russia, and the United States--are only in the draft stage, the majority of jurisdictions have published the final set of rules to go into effect January 1. While certain members may be getting more time to create finalized rules, the larger implementation timeline will not be shifted.

In a testimonybefore two House subcommittees, Fifth Third Bancorp CFO Daniel Poston (speaking on behalf of the American Bankers Association) urged the withdrawal of Basel III's "standardized approach" in light of the burdens it would bring to banks and to the overall economy. In his testimony, Poston said that most banks have no problem with capital requirements and noted capital levels are already high. The problem, he said, lies in the "arbitrary--and excessive--risk weights that will hurt banks, our customers, and the U.S. economy overall."

The implementation of the Basel III capital rules may be postponed beyond the start of 2013, according to a joint statement released by the Office of the Comptroller of the Currency, the FDIC, and the Federal Reserve. The announcement follows a comment period during which many trade organizations and institutions expressed apprehension about the new requirements.

While admitting that creating mortgage lending regulations that prevent abuse without over-burdening community banks is "challenging," Federal Reserve governor Elizabeth A. Duke suggested Friday that policymakers "abandon efforts for a one-size-fits-all approach." Speaking before the Community Bankers Symposium in Chicago, Duke said the Federal Reserve has received a large volume of comments from community banks expressing concern over the proposed regulatory capital requirements.

The ICBA has gathered nearly 15,000 signatures on a petition opposed to "applying Wall Street regulations to Main Street community banks."