Basel and Dodd-Frank clash over definitions

Author: | Published: 17 Sep 2010

Bank regulators in the US must consider the Dodd-Frank Act as they prepare for new Basel III capital requirements. Questions remain as to how the global requirements will interact with the domestic legislation.

Under the rules, so-called systemically significant institutions are subject to stricter regulation, including higher capital levels and equity ratios than other institutions.

Although the Basel Committee has yet to give a specific size to systemically significant banks, the Dodd-Frank Act applies “prudential standards for risk-based capital and leverage” to banks controlling at least $50 billion in assets. The act also creates the Federal Stability Oversight Counsel (FSOC) to designate bank holding companies other financial institutions as systemically significant.

“There will likely be...