The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Wed, 29 Jul 2026 11:32:06 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png A Better Alternative to Basel Capital Rules – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 A Better Alternative to Basel Capital Rules https://corpgov.law.harvard.edu/2012/09/28/a-better-alternative-to-basel-capital-rules/?utm_source=rss&utm_medium=rss&utm_campaign=a-better-alternative-to-basel-capital-rules https://corpgov.law.harvard.edu/2012/09/28/a-better-alternative-to-basel-capital-rules/#comments Fri, 28 Sep 2012 12:58:09 +0000 http://blogs.law.harvard.edu/corpgov/?p=33274?d=20120928085809EDT Editor’s Note: The following post comes to us from Thomas M. Hoenig, director of the Federal Deposit Insurance Corporation. This post is based on Director Hoenig’s remarks at the American Banker Regulatory Symposium, available here.

Introduction

I have been involved in central banking and financial supervision my entire career. I understand the importance of having the right market conditions and regulatory framework for an economic system to thrive. And most certainly I know that the foundation of a strong financial system is strong capital. For these reasons I wish to add my perspective on the discussion regarding Basel III. After reading the entire 1,000-plus page proposal, I would encourage the Basel Committee and the international regulatory community to step back and rethink the Basel capital standards.

It may be helpful here to recall how Basel has evolved. Following the implementation of Basel I, many in economics and finance and many of the world’s largest banks wanted a more sophisticated and flexible risk-based capital standard. The U.S. chaired the Basel II Committee then and with others agreed that such change was necessary for the largest firms to remain globally competitive. Basel II and III were also given the task of satisfying various national interests, adding more complexity. As a result, the number of Basel risk weights evolved from five to thousands.

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