Regulators will weaken Basel III banking capital rules, according to a Reuters source.
Oh, and they’re doing it for the good of the economy and to encourage lending not because banks have spent millions relentlessly lobbying against any rules that would curb profits or prevent another crisis.
The changes relate to accounting on derivatives. The original rules said banks must hold 3% capital against total assets but banks argued/lobbied/stuffed envelops full of cash in pocks and said many derivatives offset each other so it should be 3% on net exposure.
It’s a massive can of worms. In the pre-crisis banks argued everything netted out and had billions in hidden balance sheet derivatives that eventually swamped the system.
…but just to be clear, they’re changing these rules to stimulate lending and boost the recovery. Sure.
