Bernanke: Basel Ia Coming Soon

Federal Reserve Board Chairman Ben Bernanke says the federal banking regulators will be issuing a new and updated risk-based capital proposal soon that would apply to most domestic banks and thrifts."The agencies have been developing a modernized but easy-to-implement capital framework, known as Basel Ia," the Fed chairman told bankers attending their annual conventions. "The notice of proposed rulemaking should be issued soon." Basel Ia is designed to make the capital treatment of mortgages and certain other assets more risk-sensitive than the current Basel I standard. It is also designed to reduce any competitive advantages the largest U.S. banks might derive from adopting Basel II, which is a more sophisticated RBC proposal the regulators have been working on for several years. The Fed chairman said the regulators will consider suggestions that small institutions should have the option of staying with Basel I. "We will consider this possibility carefully," Mr. Bernanke told the America's Community Bankers and American Bankers Association convention via a satellite hookup.