The Federal Reserve's June 12 proposal of rules implementing Basel
III was praised as a crucial step towards a harmonised global capital
framework. But the rules create a dubious future for US banks regarding
Tier 1 contingent convertible capital (Cocos), a battle on risk
weightings, and capital raising problems for small banks.
The announcement came almost 18 months after the Basel III framework
was finalised and almost a year after the European Commission (EC)
released its own implementing package – the Capital Requirements
Directive IV (CRD VI).
US implementation of Basel III was expected as early as a year ago,
and a month before the Fed's announcement a number of New York partners
expressed concern that the latest accord would suffer a similar fate to
Basel II, which was never fully implemented in the country. But last
month's release was welcomed by US attorneys for reasons beyond
principle; largely because the...