U.S. Fed extends comment period for Basel III

WASHINGTON Wed Aug 8, 2012 11:29pm IST

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WASHINGTON Aug 8 (Reuters) - Market participants will have until Oct. 22 to comment on proposed bank capital rules, the Federal Reserve said on Wednesday, bumping the deadline back from Sept. 7.

The rules, which enact an international agreement known as Basel III, were put out for comment by the U.S. central bank in June. They largely reject pleas by the U.S. banking industry to soften parts of the new standards.

"The comment period was extended to allow interested persons more time to understand, evaluate and prepare comments on the proposals," the Fed said in a statement.

Basel III is the cornerstone of efforts by international regulators following the 2007-2009 financial crisis to make sure the global banking system is more resilient.

The new standards would force banks to rely more on equity than debt to fund themselves so that they are able to better withstand significant losses.

The announcement comes a day after a group of state banking organizations asked the three regulatory agencies that proposed the rules for an extension.

"We want to provide and need to provide you with the very best information possible," the bankers wrote to the Office of the Comptroller of the Currency, the Fed and the Federal Deposit Insurance Corporation. "Our members will find it difficult in the extreme to provide that kind of quality and necessary information to you by September 7, 2012."

It is up to each country to write rules to implement the Basel agreement for its banks.

The accord, which is to be phased in from 2013 through 2019, will require banks to maintain top-quality capital equivalent to 7 percent of their risk-bearing assets, about three times what they are required to hold under existing rules. The Fed proposal adheres to this standard.

U.S. banks have pushed regulators to allow them to more heavily count mortgage servicing rights and the unrealized gains and losses of certain securities toward their capital requirements than allowed by Basel III, but the Fed's draft rule closely follows the international agreement.

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