Tag Archives: Basel III

By Simon Johnson

The bank lobbyists have a problem.  Last week, they lost a major battle on Capitol Hill with the failure to suspend implementation of the new cap on debit card fees.  Despite the combined efforts of big and small banks, the Corker-Tester bill attracted only 54 votes in the Senate – when it needed 60. 

On debit cards, the retail lobby proved a surprisingly effective counterweight to the financial sector.  On the next big issue, the bankers have a different problem: it’s highly technical, more within the purview of regulators than legislators, and often perceived as boring.  Or, as one bank executive put it to Reuters, speaking of the capital requirements agreed between countries in the so-called Basel III framework,

“When you do mention Basel, your average member of Congress thinks ‘that pairs well with tomato and mozzarella.’” Continue reading →

By Simon Johnson

The international discussion among government officials regarding bank reform is, at an informal level, going better than you might think.  Top people in the “official sector” are increasingly willing to confront the banking lobby and even refute its more egregious claims, particularly the completely erroneous notion that making banks safer – by requiring them to hold more capital – would actually hurt the broader economy and undermine growth.

Unfortunately, the structured intergovernmental process that actually changes the rules around banks – known as Basel III (or “Basel 3”) – was rushed to an unsatisfactory conclusion last weekend.  The US and other countries with major financial centers will need to add substantial additional capital requirements at national levels if these new rules are to be at all effective. Continue reading →