Citigroup, one of the largest banks in the nation and the world, is calling for Washington to tread slowly on the Basel III rules for capital reserves at financial companies, before the rules constrict access to credit and regulators drive banks to distraction with different interpretations of the new standards.
In testimony released today, in advance of a House Financial Services Committee hearing about Basel III on Thursday, Citi executive James Garnett said the bank “broadly supports the goals of Basel III” but immediately added that “we are concerned that the cumulative capital levels will unnecessarily constrict credit for all but the nation’s most credit-worthy borrowers.” He went on to say one practical effect of the rules might be to curb banks’ appetite for buying mortgage-backed securities—a vital part of any sustained recovery in the housing market—and worried that U.S. and global financial regulators will not oversee implementation of the Basel III accords evenly.
