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Every year that passes, politicians, bankers and even some financial regulators forget how illiquidity helped the 2008 financial crisis spread like wildfire.
January 7 -
Global central bank chiefs gave lenders four more years to meet international liquidity requirements and watered down the measures in a bid to stave off another credit crunch.
January 7 -
Bankers are expected to learn in 2013 what trades the Volcker Rule allows, what qualifies as a "qualified mortgage" and what it means to be "systemically important."
January 3
Over the weekend, global regulators elected to loosen key components of the Basel III liquidity rules.
Specifically, they
Most news outlets were quick to classify the final rule as a big win for bankers, who have spent much of the last two years arguing that Basel III requirements were, among other things, too complex and virtually impossible for a majority of financial institutions (community banks, specifically) to maintain.
Some pundits suggested that the easing could have a positive influence on both markets and the lending community.
“The revisions … should make the liquidity requirement less likely to deter financing of activity in the real economy,” according to the FT’s Lex
Others have argued that less stringent rules will do very little to bolster lending or, moreover, that any potential positive influence on the economy would be negated by the deeper implications the decision carries.
“The entire financial system is rendered riskier when all of the largest institutions are cajoled by regulators into adopting a similar view of asset risk,” CNBC senior editor John Carney wrote in a
“With every part of Basel III that is gutted, we are increasingly back where we were at the eve of the crisis,” Mayra Rodríguez Valladares, a managing principal at MRV Associates, wrote in a BankThink
These sentiments, as alluded to in today’s
“The self-serving deregulation … is nothing more than history already repeating itself and we’re not out of the mess from the last go round,” one Wall Street Journal reader
However, on the opposite side of the spectrum, there are those who think believe regulators have not adequately quelled the threat Basel III poses to community banks.
“Dangers still lurk in [Basel’s] implementation in the years to come,” writes
What’s your take on the recent changes to Basel III? Do the looser requirements adequately address the problems earlier versions were believed to pose for community banks? Or does the easing have deeper implications? Let us know in the comments section below.
Jeanine Skowronski is the deputy editor of BankThink. You can contact her at
Correction: John Berlau is with the Competitive Enterprise Intstitute. An earlier version of this post incorrectly associated Berlau with the Bastiat Institute.