U.S. Federal Banking Agencies Announce Support for Basel Reforms

On December 7, 2017, the United States federal banking agencies (the FDIC, the Board of Governors of the Federal Reserve System, and the OCC) announced that they support the conclusion of efforts to finalize reforms to the Basel III agreement on international bank capital standards (with this last version informally known as “Basel IV”).  These standards reflect the international banking community’s response to the global financial crisis, and the latest changes will be phased in over time.

Basel III, introduced after the 2008 financial crisis, was an agreement to establish revised minimum banking standards in efforts to increase the quality and quantity of regulatory capital and strengthen regulation, supervision, and risk management in the banking sector.  The final concluding agreement reforms are intended, among other things, to increase the amount of capital that banks must hold by requiring them to increase liquidity and reduce leverage, as well as to improve risk sensitivity and make a level playing field for banks that are active internationally.  The U.S. federal banking agencies will consider the revisions, and they will propose related changes through notice-and-comment rulemaking.