John Walsh, the Office of the Comptroller of the Currency’s acting chief executive, said that Dodd-Frank regulations are interfering with the Basel Committee on Banking Supervision’s capital requirements.
During a special seminar on International Finance on Wednesday in Tokyo, Walsh said the Basel committee’s focus on Liquidity Coverage Ratio reflecting shorter-term aspects of liquidity and net stable funding ratio reflecting longer term aspects will help maintain short-term and long-term bank stability, HousingWire.com reports.
The LCR requires banks to hold sufficient high quality liquid assets to cover their total net cash flows for more than 30 days. The NSFR requires the available amount of stable funding to be more than what is required of stable funding for a year long period of extended stress.
U.S. banks, however, have been so occupied with complying with Dodd-Frank rules that they have not been able to focus on the Basel requirements.
"Dodd-Frank added additional capital and liquidity requirements that align reasonably, but not precisely, with the various Basel agreements," Walsh said, according to HousingWire.com.
Among hundreds of Dodd-Frank rules include requirements to heighten standards for all banks with more than $50 billion in assets, new risk-based capital requirements and an elimination of the use of external credit ratings from financial regulations.
"Interweaving all these national and international requirements, and meeting our statutory mandates and our commitments in Basel, will be the challenge of the next six to 12 months," Walsh said, HousingWire.com reports.