WASHINGTON Feb 5 A top U.S. bank regulator
plans to tell lawmakers on Thursday that final leverage rules
for U.S. banks will incorporate recent revisions to a global
capital standard, which likely means tougher requirements for
U.S. regulators proposed rules in July to limit the extent
to which banks may fund their activities through debt, part of
the Basel III global agreement to boost banks' capital levels.
In January, the international group revised the way it
requires banks to calculate whether they are meeting the
leverage requirements. That latest version is seen as somewhat
tougher on banks than the method U.S. regulators initially
proposed for firms operating in the country.
Federal Reserve Governor Daniel Tarullo plans to tell a U.S.
Senate Banking Committee hearing that the final U.S. rules would
incorporate the changes agreed on by the Basel group.
"These changes would strengthen the ratio in a number of
ways, including by introducing a much stricter treatment of
credit derivatives," he said in prepared remarks obtained by
Global regulators reached the Basel accord to make banks
safer after the 2007-2009 financial crisis. Capital rules force
banks to fund a minimum amount of business through equity,
rather than debt.
Leverage ratios are calculated as a percentage of total
assets, unlike some capital ratios that consider the riskiness
of bank assets.
U.S. regulators have proposed a 6 percent leverage ratio for
the biggest banks, twice as much as called for under the global
agreement. They also differed in how they required banks to
calculate their leverage ratios.
The Basel committee tweaked its rules in January for
calculating the leverage ratio. European banks saw that as
easing some of the requirements on them.
But that revised calculation method is tougher than the U.S.
proposal in its approach to credit derivatives, Comptroller of
the Currency Thomas Curry plans to tell the Senate committee on
It also differs from the U.S. version in its treatment of
certain off-balance sheet commitments, Curry said in prepared
remarks posted on the committee's website.
"Our preliminary analysis suggests that, in the aggregate,
the final Basel standards will generate a larger measure of
exposure - and will therefore be more stringent - than the
current and proposed U.S. standards," Curry said.
Bank groups have speculated about whether U.S. officials
would tweak their proposal to match the Basel rules. Tarullo
said the U.S. final rules would "incorporate" the international
revisions, but did not elaborate.