Basel III Endgame - Revision history

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2024-02-01T06:25:37Z

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	:<span style="color:#4B0082">'''''Bank Capital Requirements: Basel III Endgame - Congressional Research Service'''''</span>		:<span style="color:#4B0082">'''''Bank Capital Requirements: Basel III Endgame - US Congressional Research Service'''''</span>

	:"the proposal would implement some of the recommendations that Fed Vice Chair Michael Barr proposed in a previous holistic capital review and respond to issues that arose when three banks with over $100 billion in assets failed in 2023.		:"the proposal would implement some of the recommendations that Fed Vice Chair Michael Barr proposed in a previous holistic capital review and respond to issues that arose when three banks with over $100 billion in assets failed in 2023.

Doug: Layout.

2024-02-01T06:24:53Z

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	The route to this overall increase would be a substantial decrease in the flexibility of banks to model their own risks for capital adequacy calculation purposes, with a corresponding in ~~increase~~ the requirement for them to use standardised approaches to risk modelling.		The route to this overall increase would be a substantial decrease in the flexibility of banks to model their own risks for capital adequacy calculation purposes, with a corresponding increase in the requirement for them to use standardised approaches to risk modelling.

	This initiative followed the failures of three large US banks (with over $100 billion in assets) in 2023: Silicon Valley Bank, Signature Bank and First Republic Bank.		This initiative followed the failures of three large US banks (with over $100 billion in assets) in 2023: Silicon Valley Bank, Signature Bank and First Republic Bank.


	"the proposal would implement some of the recommendations that Fed Vice Chair Michael Barr proposed in a previous holistic capital review and respond to issues that arose when three banks with over $100 billion in assets failed in 2023.		:<span style="color:#4B0082">'''''Bank Capital Requirements: Basel III Endgame - Congressional Research Service'''''</span>

	~~The~~ proposal would ~~apply~~ to banks with over $100 billion in assets.		:"the proposal would implement some of the recommendations that Fed Vice Chair Michael Barr proposed in a previous holistic capital review and respond to issues that arose when three banks with over $100 billion in assets failed in 2023.

			:The proposal would apply to banks with over $100 billion in assets.

	According to the proposal, its purpose is to improve the consistency of capital requirements across banks, better match capital requirements to risk, reduce their complexity, and improve transparency of banks’ financial conditions for supervisors and the public.

			:According to the proposal, its purpose is to improve the consistency of capital requirements across banks, better match capital requirements to risk, reduce their complexity, and improve transparency of banks’ financial conditions for supervisors and the public.

	In the United States, the largest banks calculate their requirements using two methods: a standardized approach applicable to all banks and a specialized advanced approach that allows the banks to model many of their own risks.

	~~Although internal models can potentially be “gamed” (i.e.~~, ~~designed in~~ a ~~way~~ to ~~allow~~ a ~~bank~~ to ~~hold less capital rather than accurately measure risk), they can also~~ model ~~risk more sophisticatedly and be more tailored to a bank’s unique risk profile~~.		:In the United States, the largest banks calculate their requirements using two methods: a standardized approach applicable to all banks and a specialized advanced approach that allows the banks to model many of their own risks.

			:Although internal models can potentially be “gamed” (i.e., designed in a way to allow a bank to hold less capital rather than accurately measure risk), they can also model risk more sophisticatedly and be more tailored to a bank’s unique risk profile.

	Following the Basel III Endgame, the proposed rule would reduce the use of internal models through a new second standardized approach for advanced approaches banks called the expanded risk-based approach.

			:Following the Basel III Endgame, the proposed rule would reduce the use of internal models through a new second standardized approach for advanced approaches banks called the expanded risk-based approach.

	~~Other banks with over $100 billion in assets would be required to calculate risk-weighted assets under two approaches for the first time.~~

	~~Despite~~ the ~~regulators’ intentions, many within the industry have criticized this dual approach to capital requirements as unduly burdensome~~.		:Other banks with over $100 billion in assets would be required to calculate risk-weighted assets under two approaches for the first time.

			:Despite the regulators’ intentions, many within the industry have criticized this dual approach to capital requirements as unduly burdensome.

	~~The proposal would also require banks with over $100 billion in assets to include unrealized capital gains and losses on certain securities in their capital levels.~~

	~~Unrealized~~ capital losses ~~were one of the primary causes of Silicon Valley Bank’s failure~~.		:The proposal would also require banks with over $100 billion in assets to include unrealized capital gains and losses on certain securities in their capital levels.

			:Unrealized capital losses were one of the primary causes of Silicon Valley Bank’s failure.

	~~The proposal would also extend two capital requirements — the supplementary leverage ratio and countercyclical capital buffer — to all banks with over $100 billion in assets."~~

	''(Bank Capital Requirements: Basel III Endgame - Congressional Research Service - November 2023.)''		:The proposal would also extend two capital requirements — the supplementary leverage ratio and countercyclical capital buffer — to all banks with over $100 billion in assets."

			:''(Bank Capital Requirements: Basel III Endgame - Congressional Research Service - November 2023.)''

Doug: Layout.

2024-01-31T02:21:59Z

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	* [[Standardised Approach]]		* [[Standardised Approach]]
	* [[Supervision]]		* [[Supervision]]
	* [[Supplementary leverage ratio] (SLR)		* [[Supplementary leverage ratio]] (SLR)
	* [[Transparency]]		* [[Transparency]]
	* [[Unrealised loss]]		* [[Unrealised loss]]

Doug: Mend link.

2024-01-31T02:21:32Z

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	* [[Capital Requirements Regulation]] (CRR)		* [[Capital Requirements Regulation]] (CRR)
	* [[Central bank]]		* [[Central bank]]
	* [[Countercyclical ~~capital~~ buffer]]		* [[Countercyclical buffer]]
	* [[First Republic Bank]]		* [[First Republic Bank]]
	* [[Game]]		* [[Game]]
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	==Other resource==		==Other resource==
	*[https://crsreports.congress.gov/product/pdf/R/R47855 Bank Capital Requirements: Basel III Endgame - Congressional Research Service - November 2023]		*[https://crsreports.congress.gov/product/pdf/R/R47855 Bank Capital Requirements: Basel III Endgame - Congressional Research Service - November 2023]

	~~[[Category:Accounting,_tax_and_regulation]]~~
	~~[[Category:Investment]]~~
	~~[[Category:The_business_context]]~~

	[[Category:Accounting,_tax_and_regulation]]		[[Category:Accounting,_tax_and_regulation]]
	[[Category:Investment]]		[[Category:Investment]]
	[[Category:The_business_context]]		[[Category:The_business_context]]

Doug: Create page - source - CRS report - https://crsreports.congress.gov/product/pdf/R/R47855

2024-01-31T02:20:37Z

Create page - source - CRS report - https://crsreports.congress.gov/product/pdf/R/R47855

New page

''Bank regulation - capital requirements - Bank for International Settlements (BIS) - United States.''

The Basel III Endgame is a proposal to amend the capital adequacy requirements for banks regulated in the United States.

The overall effect would be to increase the amounts of capital that the banks are required to hold.

The route to this overall increase would be a substantial decrease in the flexibility of banks to model their own risks for capital adequacy calculation purposes, with a corresponding in increase the requirement for them to use standardised approaches to risk modelling.

This initiative followed the failures of three large US banks (with over $100 billion in assets) in 2023: Silicon Valley Bank, Signature Bank and First Republic Bank.

"the proposal would implement some of the recommendations that Fed Vice Chair Michael Barr proposed in a previous holistic capital review and respond to issues that arose when three banks with over $100 billion in assets failed in 2023.

The proposal would apply to banks with over $100 billion in assets.

According to the proposal, its purpose is to improve the consistency of capital requirements across banks, better match capital requirements to risk, reduce their complexity, and improve transparency of banks’ financial conditions for supervisors and the public.

In the United States, the largest banks calculate their requirements using two methods: a standardized approach applicable to all banks and a specialized advanced approach that allows the banks to model many of their own risks.

Although internal models can potentially be “gamed” (i.e., designed in a way to allow a bank to hold less capital rather than accurately measure risk), they can also model risk more sophisticatedly and be more tailored to a bank’s unique risk profile.

Following the Basel III Endgame, the proposed rule would reduce the use of internal models through a new second standardized approach for advanced approaches banks called the expanded risk-based approach.

Other banks with over $100 billion in assets would be required to calculate risk-weighted assets under two approaches for the first time.

Despite the regulators’ intentions, many within the industry have criticized this dual approach to capital requirements as unduly burdensome.

The proposal would also require banks with over $100 billion in assets to include unrealized capital gains and losses on certain securities in their capital levels.

Unrealized capital losses were one of the primary causes of Silicon Valley Bank’s failure.

The proposal would also extend two capital requirements — the supplementary leverage ratio and countercyclical capital buffer — to all banks with over $100 billion in assets."

''(Bank Capital Requirements: Basel III Endgame - Congressional Research Service - November 2023.)''

== See also ==
* [[Bank for International Settlements]] (BIS)
* [[Basel III]]
* [[Capital]]
* [[Capital adequacy]]
* [[Capital Requirements Directive]] (CRD)
* [[Capital Requirements Regulation]] (CRR)
* [[Central bank]]
* [[Countercyclical capital buffer]]
* [[First Republic Bank]]
* [[Game]]
* [[Internal Models Approach]]
* [[Regulatory capital]]
* [[Risk Weighted Assets]] (RWAs)
* [[Security]]
* [[Signature Bank]]
* [[Silicon Valley Bank]]
* [[Standardised Approach]]
* [[Supervision]]
* [[Supplementary leverage ratio] (SLR)
* [[Transparency]]
* [[Unrealised loss]]

==Other resource==
*[https://crsreports.congress.gov/product/pdf/R/R47855 Bank Capital Requirements: Basel III Endgame - Congressional Research Service - November 2023]

[[Category:Accounting,_tax_and_regulation]]
[[Category:Investment]]
[[Category:The_business_context]]

[[Category:Accounting,_tax_and_regulation]]
[[Category:Investment]]
[[Category:The_business_context]]