Fed Nominee Quarles Seen Breaking Ice in Basel Rule Standoff
By Boris Groendahl, Silla Brush, and Alexander Weber
Bank regulators worn down after a year of butting heads over new global capital rules see a glimmer of hope emerging in Washington in the form of Randal Quarles, who’s awaiting confirmation as the U.S. Federal Reserve’s top bank overseer. With European countries led by France and Germany dug in on one side, and the U.S. on the other, efforts to complete the capital standards known as Basel III have been deadlocked since regulators got close to a deal in Santiago, Chile, late last year. The divisions only deepened after the election of President Donald Trump sowed doubts about the U.S. commitment to global agreements. “There is no U.S. support among the industry or regulators for a low floor, because the U.S. rules will remain gold-plated and any relaxed approach to model discretion exacerbates regulatory-arbitrage opportunities outside the U.S.,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics in Washington. “In sharp contrast to EU banks, U.S. ones must hold the higher of their standardized or advanced weightings, not the lowest one.”