For U.S. Banks, It's Finally Time For The Full Basel Rules

After a long delay, the Federal Reserve Board announced final Basel 2.5 and draft Basel III capital rules for financial institutions on June 7. The U.S. has lagged Europe and Asia in finalizing these rules because of the added complexity of coordinating with legislation under the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA). Standard&Poor's believes that large, complex banks mostly anticipated the new trading risk regulation and proposed capital rules, given capital planning requirements under DFA. However, some of the specific details, including the broader scope of application, might have surprised smaller and regional banks, but we view them favorably. We don't expect the Fed's final Basel 2.5 rules to have a broad impact on U.S.

...June 18, 2012 After a long delay, the Federal Reserve Board announced final Basel 2.5 and draft Basel III capital rules for financial institutions on June 7. The U.S. has lagged Europe and Asia in finalizing these rules because of the added complexity of coordinating with legislation under the Dodd-Frank Wall Street Reform and Consumer Protection Act (DFA). Standard & Poor's believes that large, complex banks mostly anticipated the new trading risk regulation and proposed capital rules, given capital planning requirements under DFA. However, some of the specific details, including the broader scope of application, might have surprised smaller and regional banks, but we view them favorably. We don't expect the Fed's final Basel 2.5 rules to have a broad impact on U.S. bank ratings because the risk-adjusted capital (RAC) framework we use to assess banks' capital and earnings applies much higher charges to banks' trading positions than the Basel 2.5 accord required. However, although transparency...

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