The consultation period for the Basel Committees
liquidity and banking risk proposals closes today. But banking
lawyers say the Committee should not begin implementation
immediately, and instead carry out quantitative impact studies
to avoid crippling lending.
If changes are implemented as proposed and on a short
timetable, bank capital ratios will drop precipitously for many
large financial institutions, said Mark Nicolaides, a
regulatory partner at Latham & Watkins in London.
Regulators would be well-advised to put off the day of
reckoning for one to three years to give banks time to
deleverage and raise more capital.
The potential problems are caused...