•Treasury Calls for Tougher Worldwide Bank Capital, Liquidity Rules: Banks Up Creek

U.S. Treasury Calls for Higher Bank Capital Standards (Update1)
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http://www.bloomberg.com/apps/news?pid=20601087&sid=akgf25ofxSLo

By Robert Schmidt

Sept. 3 (Bloomberg) -- The U.S. Treasury Department said it wants a global agreement requiring banks to increase their capital cushions to be reached by the end of next year.

In a statement of principles, issued today in Washington, the department said that an accord on capital and liquidity rules should be reached by the end of 2010 and be in place by the end of 2012.

The rules must be “as uniform as possible across countries,” the statement said, “to better protect the safety and soundness of individual banking firms and the stability of the global financial system and economy.”

Treasury Secretary Timothy Geithner departs today for meetings in London with finance ministers and central bankers from the Group of 20 nations. He sent a letter yesterday to his counterparts seeking to hammer out the stricter rules.

Regulators are calling for tougher supervision of banks, saying they contributed to the global financial crisis by investing in risky assets without setting aside adequate reserves. The U.S. was forced to pass a $700 billion package last year to bail out companies including Citigroup Inc. and Bank of America Corp.

The Treasury statement didn’t offer specifics on how much extra money banks should be required to keep on hand. It said that capital requirements should be boosted for all banks, while firms posing the biggest threat to the financial system should have an even higher standard.

The department also called for banks to be subject to “simple, non-risk-based leverage constraint” and a “conservative, explicit liquidity standard.”

To contact the reporter on this story: Robert Schmidt in Washington at rschmidt5@bloomberg.net.
Last Updated: September 3, 2009 17:21 EDT

 

No biggy...they'll just give em more TARP money and non-disclosed short term "loans" to strenghthen those balance sheets

 

Why "world wide"?

We should fix the shit in Wall street first before mandating what other countries should do. No wonder people hate us.

 

Typical closing of the barn door after the horses have escaped, governmental action.

 

This is a pretty good initiative, and something the G20 might go along with. The reasoning is that capital sees no borders anymore, and it's useless for the US to reel in dometic credit creation if there's loopholes in other countries which allows the created credit to be imported back into the US. Should be interesting to see what happens...

 

We're telling the government of Switzerland what to do, let alone their banks.

It all makes sense, even if it's truly unbelievable.