If international efforts to craft new capital rules for banks don’t go back to the drawing board for a significant overhaul, the United States should abandon the Basel III effort while it still can, says Thomas Hoenig, a director of the Federal Deposit Insurance Corporation.
“Given the questionable performance of past Basel capital standards and the complexities introduced in Basel III, the supervisory authorities need to rethink how capital standards are set,” Hoenig, former president of the Federal Reserve Bank of Kansas City, said during a speech Friday at the American Banker Regulatory Symposium in Washington, D.C. “Starting over is difficult when so much has been committed to the current proposal. The FDIC is no different from other U.S. and international regulatory agencies where committed staff has devoted enormous effort to drafting and implementing Basel III. However, starting over offers the best opportunity to produce a better outcome”
