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Article: Basel Capital Accord Must Leave Some Room for Human Judgment.(Banking industry concerned over economic downturn, new regulations)(Government Activity)(Brief Article)
- Article from:
- American Banker
- Article date:
- August 30, 2002
- Author:
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Most people would say that the past couple of years have been challenging ones for the nation's banking industry and for the nation's economy. However, it's possible that the current situation could be much worse for both if the much-debated Basel II Accord were in place today.
Under Basel II, well-capitalized, well-managed banks would likely be facing escalating capital charges triggered by last year's economic downturn. This is because the proposed accord's Pillar I requirements for capital include a strict and systematic reaction to credit rating changes that is not present in the current regime.
If Basel II were in effect today, this mechanical ...