Basel Under Attack!
12Sept2011 Pj de Marigny, DITMo Strategies
Director, GARP S. California Chapter
13Sep2011, Newport Beach, CA. Just so the argument is understood: Basel critics claim Basel is:
1 – anti-American favoring European institutions
2 – over-regulating larger institutions
3 – causes an agency problem in that Basel is not a body under United States authority or voted on by our electorate
4 – futile in application because fungible capital will be deployed around the regulated institutions or thru affiliates
5 – detrimental to capital formation and credit facilities
Global Association of Risk Professionals (GARP.com) publishes several papers and sponsors educational programs for Basel integration.
To quickly juxtapose, Basel III is:
1 – a risk based standard rather than a subjective US money center bank derived Fed Reg standard
2 – risk centered on issues that are peculiar to larger institutions that is the point
3 – a body to represent the consituents of BIS including the Fed which itself is a private bank not voted on by the US electorate but is a money center facilitator, money market regulator, and treasury intermediary
4 – a mechanism for the deployment of capital around regulated institutions is precisely the point of Basel III – it supersedes a country’s banking rules to create a single standard cross collateralizing risk evenly across international banking
5 – a definitive ruler of bank arbitrage risk that set will aid banks not only in defining constraints but will pinpoint the threshold of operating and financial leverage so financial institutions may operate in confidence providing liquidity and credit facilities with certainty *.*