Go Brown-Vitter! April 7, 2013 at 7:15 am
The largest U.S. banks… would have to hold capital in excess of Basel III standards under a proposal being drafted by Senate Democrats and Republicans to curb the size of too-big-to-fail banks.
The current draft of the legislation would require U.S. regulators to replace Basel III requirements with a higher capital standard: 10 percent for all banks and an additional surcharge of 5 percent for institutions with more than $400 billion in assets. Senators Sherrod Brown, a Democrat from Ohio, and David Vitter, a Republican from Louisiana, have said they intend to introduce the bill this month.
I doubt that they can get this through Congress in this form, but you have to applaud the attempt.
Update. The full text of the bill is here. It’s even more interesting than the Bloomberg story indicates. The highlights are:
- 10% simple leverage ratio limit;
- ‘Continuously increasing’ capital requirements above $400B of total assets (although it doesn’t say how);
- Total assets include gross derivatives unless daily VM is exchanged;
- A ban on Basel III implementation in the US;
- Prohibitions on affiliate transactions and an anti-avoidance clause.