US bank regulators finally reached agreement on Friday on the implementation of the Basel II capital rules, which will bring the regime for large US banks more in line with that already adopted in Europe, The Financial Times reports.
The agreement, which could significantly reduce the amount of capital large banks would be required to hold, ends years of wrangling among the four US regulators that has infuriated large banks and alarmed politicians in the US and exasperated banks and regulators in Europe.
In a victory for the big US banks, the Federal Deposit Insurance Corporation has dropped its insistence that the rules be redrawn if they resulted in a fall in total capital of more than 10 per cent.
While officially leaving the process up to the regulators, the US Treasury has been putting increasing pressure on them to reach agreement.
“Resolution on this matter is an essential component of any effort to modernise our regulatory structure and to strengthen American capital markets’ competitiveness,” says Bob Steel, the Treasury undersecretary.