The Basel Committee on Banking Supervision is a group of regulators and bankers that oversee the world’s major banks. In 2010, the committee came up with the Basel III accord that has now been revisited due to many complaints that the rules are unworkable. The Rule was designed to ensure that big banks are able to weather financial crises without running short of cash.
The rule calls for banks to have enough cash to cover 100% of what that bank could potentially lose within 30 days. Under this rule, Banks would have to come up with more than $2 trillion by 2015.
‘The rule has been watered down and changes to the rule extend its enactment until 2019 and now allows banks to use less traditional assets to account for up to 15% of the mandatory cash” according to securities attorney Erica Reed.
Widespread opinion outside of Europe and especially in the U.S. is that the rules may never go into effect. Further, many have concerns that they will not be effective if they ever do. The Basel Committee stands behind their changes, and did not issue a direct opinion on this most recent action. Erica Reed believes “this is yet another example of Wall Street exerting its significant lobbying power to avoid post financial-crisis regulatory structure designed to protect Main Street.”
James L. Kauffman is an associate attorney with the Pensacola, Florida, law firm of Levin, Papantonio, Thomas, Mitchell, Rafferty, & Proctor. He is a member of the Business Torts Department and his practice focuses primarily upon representing individuals and entities seeking financial recovery for losses suffered from securities fraud.