Bies defends Basel II norms against big-bank critics

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Feb 26 : Federal Reserve governor Susan Bies defended the US approach to implementing the Basel II international banking rules, saying it was necessary to ensure the safety and soundness of the banking system.

“The Federal Reserve believes that an appropriately conservative approach to capital adequacy serves the US’ interest in maintaining the safety, soundness and resiliency of our banking system,” Bies said in prepared remarks at a Global Association of Risk Professionals convention in New York. Bies said in a speech on Monday she was sensitive to large banks’ complaints that the more conservative US proposal could be burdensome and costly, and place them at a competitive disadvantage to overseas lenders.

Basel II is an international banking agreement aimed at linking a bank’s capital requirements closer to the risks associated with complex international banking transactions. The rules would be mandatory for about a dozen of the nation’s internationally active banks, including New York-based Citigroup Inc and JPMorgan Chase & Co, Charlotte, North Carolina-based Wachovia Corp. and Seattle-based Washington Mutual Inc.