Fed Gives Bankers More Time to Whine
NEW YORK (TheStreet) -- The Federal Reserve on Wednesday extended the public comment period on its proposed final rules to implement the Basel III capital standards for banks, giving the industry a much needed month-and-half to complain about requirements they have resisted for years.
The Fed, along with the Federal Deposit Insurance Corporation and the Comptroller of the Currency on June 7 proposed rules to implement the enhanced Basel III capital standards for large banks, seeking comments by Sept. 7.
After Rep. Spencer Bachus (R-Ala.) -- the Chairman of the House Committee on Financial Services -- last Thursday sent a letter to Federal Reserve chairman Ben Bernanke requesting a 90-day extension to the public comment period, the Federal reserve and the other federal bank regulators announced that the comment period would be extended by 45 days, "to allow interested persons more time to understand, evaluate, and prepare comments on the proposals."
Bachus had called the new set of rules "extremely complex," and said that "a longer comment period will lead to more substantive comments, which in turn will be much more useful to reviewers."
The Fed's compromise extension means that the regulators may well settle on their final version of the rules before the November elections.
Even though the regulators' final Basel III rule technically hasn't been finalized, large banks have already acted to modify their capital structures to conform to the new rules, redeeming trust preferred securities that will no longer qualify as Tier 1 capital, and for the most part, avoiding paying premiums for high-yielding trust preferreds, while also being free to call in the securities before the original call dates, because of the "capital treatment event.