In a stark reminder of the gap between the Basel Committee’s approach to international standard-setting and the United States’ approach to administrative procedure and due process, a pair of speeches this week make clear that, in the eyes of some, “Basel III” (i.e., Basel IV) is done, and there is no questioning it.
In the words of outgoing Basel Committee Chair Stefan Ingves earlier this week:
[T]he move to national implementation should not be read as an invitation to reopen policy issues and debates at a domestic level. While the varying legislative and procedural arrangements used to implement Basel standards across the Committee’s membership must be fully respected, It is concerning to see ongoing lobbying efforts by some banks and other stakeholders to undo or dilute aspects of the agreed Basel standards in some jurisdictions. The unsound expedient of adopting standards that fall below the Basel Committee’s minimums can only lead to regulatory fragmentation and in a bad scenario a potential race to the bottom.
Never mind that Basel IV was a reopening of the policy issues and debates of Basel III, which in turn was a reopening of the policy issues and debates of Basel II, which was … well, you get the point. And never mind that Basel IV is neither law nor treaty, and that therefore U.S. law explicitly requires that any rulemaking by the U.S. banking agencies to implement Basel IV be a de novo opening, not a re-opening, of these policy issues in the United States. And never mind, too, that the unsound expedience by which Basel IV was pushed through might lead some (including us) to dare to wonder whether it might be improved. The Basel Committee has apparently made up its mind, and our minds too. The clear message is, to borrow a phrase: Basel IV, right or wrong.
Or, as Andreas Dombret of the Deutsche Bundesbank put it even more succinctly in a separate speech the same day: “Yes, we are done now with Basel III. Therefore, all discussions about the outcome – or the desired outcome – are a waste of time.”
Disclaimer: The views expressed in this post are those of the author(s) and do not necessarily reflect the position of The Clearing House or its membership, and are not intended to be, and should not be construed as, legal advice of any kind.
