One event I missed posting on at the time was the final agreement
of all of the US regulators on the way that Basel II will be implemented
in the US that happened 10 days ago. After some seriously
silly obstinate argument from the FDIC, I was please to note at the time that the Fed largely got its way in the end, and now those rules have now been given final agreement.
To those of us watching from the outside this has been a painful process. I can only imagine how difficult it must have been for the US banks. The end result was close to the right one – the one I suggested a full year ago. In this, at least, the delay was worthwhile. Going with the FDIC’s original position would have been close to suicide for the whole US banking system – and a long, slow suicide it would have been.
Randall Kroszner’s speech on the matter is worth a read. The way he delicately steps around the
blithering idiocy errors of the FDIC and the local bank lobbyists is almost artful.
One bit irks me, though – at the bottom of page 5 of the speech he is seeming to say that the US regulators will be coming up with a “standardised” method of implementing Basel II. Amazing – I wonder what paras 50 to 210 of the New Accord are?
Anyway, if you are interested in my opinion on the whole process read the category. Reading in reverse order is probably best. I think some of my best posts have been in there.
In most of the rest of the world the process has been fairly sedate – well, as sedate as a nearly complete change to the bank regulatory framework can ever be. What am I going to talk about in this way again while we wait for Basel III?