Basel Ia Cap Rule Published

Federal banking regulators have finally published the Basel Ia capital rule for public comment, and the comment period on the more advanced Basel II rule has been extended to create overlapping comment periods that end March 26."The agencies believe it's important that interested parties be able to compare the risk-based capital requirements in the Basel II and Basel Ia notices of proposed rulemaking," says a Federal Register notice. Basel II is designed for the very largest of U.S. banks that have internal risk models. Basel Ia is less sophisticated than Basel II, but more risk-sensitive than the current RBC standard. Regulators want overlapping comment periods to ensure that the RBC proposals don't give the largest banks a competitive advantage over midsize Basel Ia banks. Sheila Bair, chairman of the Federal Deposit Insurance Corp., has also suggested that Basel Ia can be modified to suit the largest banks. "Basel Ia is an important improvement to the risk sensitivity of our capital requirements," Ms. Bair said at a Dec. 5 FDIC board meeting. "I am particularly interested in comments on whether this approach or a variation of it should be available to any U.S. bank."