Bankers Warn of Fallout from Basel Capital Charges

By Kate Davidson

Executives participating in American Banker‘s regulatory symposium Monday urged regulators to consider the industry costs of implementing the Basel III capital rules, including a capital surcharge on systemically important institutions. Sitting on a panel discussing the Basel accords, James Beit, managing director at JPMorgan Chase & Co., reiterated concerns about the capital rules raised by his company’s CEO, Jamie Dimon. The bankers’ comments reflect concerns about Basel III as part of growing uncertainty about future regulation, which many say is causing banks to limit their lending at a time when the economy is trying to recover. The extra surcharge for the largest institutions would be between 1% and 2.5%. Participating in the Basel discussion, Karen Shaw Petrou, managing partner at Federal Financial Analytics Inc., said regulators have tried to tackle too much too quickly. “You’d really think the regulators … have walked into Wendy’s, … ordered every topping, added every condiment, asked for a side of fries and then decided to have a shake,” she said. “They ordered everything all at once.” The “ingredients” might be good, Petrou said, but she warned that all of them together “are going to make us sick.”