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Banks Forced to Hog-tie Capital

In The Wall Street Journal by Damian Paletta and David Enrich (Banks get New Restraints), Sept. 13, 2010 ({FP}pg.A1-2). By 2019, internationally active banks will be required to have a capital reserve of at least 7% of their assets. Currently, the standard is 2% internationally and 4% in the United States.  Proponents of the new rules believe reform was necessary to ensure the interconnected global banking system doesn't face another crisis such as that which led to taxpayer-funded bailouts in 2008 and 2009. Banks countered by warning that the new rules could drive up the costing of lending for customers. The Basel Committee on Banking Supervision compromised by allowing the new rules to be phased in over several years. (Stefan Walter, secretary general of the Basel Committee on Banking Supervision, Ben Bernanke, Federal Reserve Chairman, wsjreview.com).



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