On the surface, one might be lulled into viewing statements issued over the last two days by the Group of Governors and Heads of Supervision (GHOS), the oversight body of the Basel Committee on Banking Supervision, as a steadfast affirmation of its mission to make the world’s banks safer and more resilient.
In fact, despite language that might lead you to believe otherwise, a unanimous vote by those overseers on revisions to the Basel Committee’s Liquidity Coverage Ratio (LCR) offers a victory for banks and relief from what they have fought as onerous requirements. Among the concessions earned: four additional years to phase in new capital rules and a decision that “safe” and liquid bank capital can include (albeit with holding limits and after a “haircut” to their value) stocks and residential mortgage-backed securities.
