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Banking regulators delay effective date of Basel III rules

Elizabeth Duke

Banking regulators addressed industry concerns last week when they announced Basel III proposals would not take effect at the beginning of the year, citing concerns regarding the ability of institutions to meet the compliance deadline.

“In light of the volume of comments received and the wide range of views expressed during the comment period, the agencies do not expect that any of the proposed rules would become effective on January 1, 2013…” the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. said in a joint statement on Friday.

Regulators proposed three rule-makings in June that would reform and replace the current capital rules with Basel III rules beginning Jan. 1.

Many industry participants, however, voiced concern regarding their ability to meet the standards before the deadline and the subsequent possibility of being fined.

Governor Elizabeth Duke of the Federal Reserve told attendants at the annual Community Bankers Symposium last week that the Fed’s Board of Governors was “closely consider[ing]” each issue brought up by industry participants.

“We heard many different concerns during our outreach efforts, but there were some recurring themes, including: the complexity of the proposed changes, the operational costs that would be incurred to track data that are not currently needed to calculate capital ratios,” Duke said, according to Equities.com. “It’s still far too early in the process to know where we and the other agencies are going to come out on these and other issues, or when final rules may be released. But what I can promise you is that before we issue final capital rules, we will do everything possible to address the concerns that have been expressed by community banks and still achieve the goal of having strong levels of high-quality capital—built up over a reasonable and realistic transitional period—in banks of all sizes, including community banks.”

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