* Fed official says Basel will be tough on all banks
* Clearing House releases study against surcharge
By Dave Clarke and Alexandra Alper
WASHINGTON, Sept 22 New international capital
standards will not put the largest U.S. banks at a competitive
disadvantage against their foreign competitors, a top Federal
Reserve official said on Thursday.
Large U.S. banks have complained that while the standards
are intended to apply internationally, they will be a step too
far for large U.S. institutions already facing new regulatory
requirements under the 2010 Dodd-Frank financial oversight
Banking leaders, such as JPMorgan Chase & Co (JPM.N) Chief
Executive Jamie Dimon, contend regulators are not weighing the
cumulative impact of all regulations. They have been
particularly critical of the stricter capital standards that
the largest banks will have to meet as part of the Basel III
international regulatory agreement.
Mark Van Der Weide, a senior staff member at the Federal
Reserve's Division of Banking Supervision and Regulation, said
Basel negotiators did not develop the capital standards in "a
vacuum" and took into account the various new rules banks are
facing both in the United States and elsewhere.
He said certain aspects of the Basel agreement, such as how
mortgage servicing rights are treated, may be harder on U.S.
banks. Other aspects of the deal, such as a new leverage ratio,
will weigh more heavily on banks headquartered in Europe or
elsewhere, he said.
"We can keep the playing field relatively level," Van Der
Weide said at a conference hosted by PricewaterhouseCoopers and
Georgetown University. He added he was voicing his own opinion,
not official Fed policy.
The Basel agreement will require banks to maintain
top-quality capital equal to 7 percent of their risk-bearing
On top of that, global "systemic" banks may have to hold up
to an additional 2.5 percent buffer. Another 1 percent
surcharge would be imposed if a bank became significantly
The heads of the Group of 20 leading and emerging economies
are expected to give final approval to these rules in November
and then it would be up to each country to implement them.
The banking industry is mounting an intense lobbying
campaign against the section of the Basel agreement that would
require the world's biggest banks to hold more capital.
Banking executives and their lobbying groups contend the
higher standards would result in less lending, which in turn
would hurt the economy.
Regulators and other supporters of higher capital standards
have countered that the economy would benefit from a sounder
financial system and that the industry is overstating the
impact of the rules on lending.
On Thursday the Clearing House, a group representing large
international banks, released a study arguing against the
additional capital charge on large banks.
The group contends that the minimum capital standards for
all banks required by Basel III would make the largest
institutions sound enough to weather future economic or market
The group represents institutions such as Citigroup (C.N),
JPMorgan Chase, Bank of America Corp (BAC.N) and Wells Fargo &
(Reporting by Dave Clarke and Alexandra Alper, editing by
Gerald E. McCormick)