The crisis of financial markets across the Atlantic provides new pretexts to a critique of Basel 2 prudential standards, as much of the American players of finance has never seen a very good look. The burst of skepticism takes place while the United States, who adopt the Basel 2 standards at least a year after the Europeans, seemed this summer want to speed up the process, simply believe the experts, because as the deadline approached and that banks and their authorities had never really wanted to stay out of this international agreement.
"These rules are again obstructed and many wonder whether to implement", explains Peter Wallison of the American Enterprise Institute, a Washington think-tank. The specialist in question explains that two elements focus in the US recriminations against the Basel 2 standards, that the Europeans would conversely even more urgent since the crisis. Firstly, rules of requirement capital defining the risks that can take the banks on their activities are based on ratings from agencies such as Moody's, Standard and Poor's and Fitch, which pass through a severe crisis of confidence since this summer.
Then, the banks balance sheets are revalued under Basel 2 much more often than under Basel 1, which, according to Peter Wallison, raises many problems of stability, when you know the difficulty to achieve effective valuation models. Impairment losses of banks, currently, to adjust their balance to the "sub-prime" post-crisis, evidenced. One might add that the obligation imposed on banks by Basel 2 to communicate more directly to the markets about their risks will increase instability. For Peter Wachtel, New York University, "further delays are therefore not to be excluded."
For the moment, US banks fifteen large are preparing to go to the Basel 2 standards say "Advanced", the option adopted by the European banks. They begin to do that after a probationary period of "four quarters", which ends at the end of the first quarter of 2009, is approximately fifteen months after the European banks. Then, these large American banks are subject to controls more drastic than their competitors of the old continent. Indeed, they cannot reduce their capital increments for a period of three years after which they will benefit from all the advantages of Basel 2. For smaller US banks which cannot afford the option "Advanced", a "standard" option will be eventually possible as of 2009, according to modalities to be defined.
"These offsets are expensive."
For the present international banks in the United States, where the authorities are not yet ready, a period of adjustment will therefore open. Therefore, the U.S. subsidiaries of European banks will be brought to progressively align with standards based on the status of their local competitors, which are not necessarily subject to the more advanced methods. "This situation and differences in the details of the rules applicable are quite difficult to manage and expensive cost in terms of investment in information systems", explains Christian Lajoie, Coordinator of the Basel 2 of BNP Paribas crossing.
Before the crisis, US banks were on their side inquiétées suffer a competitive disadvantage with foreign banks subject to prudential rules more flexible through Basel 2 and therefore likely to take more risks. These concerns are however more topical. Everywhere in the world, in effect, banks increase their capital to regain the confidence of investors frightened by that hide their portfolios.