Basel III is an international regulatory accord for reforms designed to mitigate risk within the international banking sector by requiring banks to have more capital on hand. However, the banking industry has depicted the reforms, which largely call for the country's largest banks to put aside more capital in reserve to weather financial storms, as a threat to the American economy.
In a lobbying blitz Basel III's supporters have called "unprecedented," the banking lobby has amassed an army of lobbyists in Washington D. The regulations date to the wake of the to financial crisis, when financial watchdogs worldwide met to discuss ways to avoid a similar catastrophe.
In , they agreed through the international Basel Committee on Banking Supervision to develop minimum capital, leverage, and liquidity requirements to ensure major banks could survive another upheaval. Lobbies like the Bank Policy Institute have taken to the airwaves and online, warning that the suggested regulations, which targeted only about 37 U. The banks claim the reforms would not make them any more stable and would have knock-on effects on their ability to lend funds to those with less credit, including minorities who have historically faced problems obtaining credit from American financial institutions.
Soon after the end of the commentary period in early , federal regulators were already backtracking on their initial proposals from , which made the rules defenders furious. The final regulations are set to be released with enough time to take effect on July 1, At that point, a three-year phase-in of the regulations would begin.
But what exactly does Basel III entail, and why has it led to such heated rhetoric in the financial world? Below, we go through what's in the reforms, how they would impact banks, and why what happens to Basel III Endgame is important for everyday investors. Basel III was rolled out by the Basel Committee on Banking Supervision , a consortium of central banks from 28 countries based in Basel, Switzerland, shortly after the financial crisis of β Many banks were overleveraged and undercapitalized during this period despite earlier reforms called Basel I and Basel II.
