Executive Order 12866 requires Federal agencies to prepare a regulatory impact analysis for agency actions that are found to be �significant regulatory actions.� �Significant regulatory actions� include, among other things, rulemakings that �have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.�86 Regulatory actions that satisfy one or more of these criteria are referred to as �economically significant regulatory actions.�
The OCC anticipates that the proposed rule will meet the $100 million criterion and therefore is an economically significant regulatory action. In conducting the regulatory analysis for an economically significant regulatory action, Executive Order 12866 requires each Federal agency to provide to the Administrator of the Office of Management and Budget�s (OMB) Office of Information and Regulatory Affairs (OIRA):
- The text of the draft regulatory action, together with a reasonably detailed description of the need for the regulatory action and an explanation of how the regulatory action will meet that need;
- An assessment of the potential costs and benefits of the regulatory action, including an explanation of the manner in which the regulatory action is consistent with a statutory mandate and, to the extent permitted by law, promotes the President's priorities and avoids undue interference with State, local, and tribal governments in the exercise of their governmental functions;
- An assessment, including the underlying analysis, of benefits anticipated from the regulatory action (such as, but not limited to, the promotion of the efficient functioning of the economy and private markets, the enhancement of health and safety, the protection of the natural environment, and the elimination or reduction of discrimination or bias) together with, to the extent feasible, a quantification of those benefits;
- An assessment, including the underlying analysis, of costs anticipated from the regulatory action (such as, but not limited to, the direct cost both to the government in administering the regulation and to businesses and others in complying with the regulation, and any adverse effects on the efficient functioning of the economy, private markets (including productivity, employment, and competitiveness), health, safety, and the natural environment), together with, to the extent feasible, a quantification of those costs; and
- An assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, identified by the agencies or the public (including improving the current regulation and reasonably viable nonregulatory actions), and an explanation why the planned regulatory action is preferable to the identified potential alternatives.
Set forth below is a summary of the OCC�s regulatory impact analysis, which can be found in its entirety at http://www.occ.treas.gov/law/basel.htm under the link of �Regulatory Impact Analysis for Risk-Based Capital Standards: Revised Capital Adequacy Guidelines (Basel II), Office of the Comptroller of the Currency, International and Economic Affairs (2006)�.
Federal banking law directs Federal banking agencies, including the OCC, to require banking organizations to hold adequate capital. The law authorizes Federal banking agencies to set minimum capital levels to ensure that banking organizations maintain adequate capital. The law also gives banking agencies broad discretion with respect to capital regulation by authorizing them to use any other methods that they deem appropriate to ensure capital adequacy.
Capital regulation seeks to address market failures that stem from several sources. Asymmetric information about the risk in a bank�s portfolio creates a market failure by hindering the ability of creditors and outside monitors to discern a bank�s actual risk and capital adequacy. Moral hazard creates market failure in which the bank�s creditors fail to restrain the bank from taking excessive risks because deposit insurance either fully or partially protects them from losses. Public policy addresses these market failures because individual banks fail to adequately consider the positive externality or public benefit that adequate capital brings to financial markets and the economy as a whole.
Capital regulations cannot be static. Innovation in and transformation of financial markets require periodic reassessments of what may count as capital and what amount of capital is adequate. Continuing changes in financial markets create both a need and an opportunity to refine capital standards in banking. The Basel II framework, and its proposed implementation in the United States, reflects an appropriate step forward in addressing these changes.
Under the proposed rule, current capital rules would remain in effect in 2008 during a parallel run using both current non-Basel II-based and new Basel II-based capital rules. For the following three years, the proposed rule would apply limits on the amount by which minimum required capital may decrease. This analysis, however, considers the costs and benefits of the proposed rule as fully phased in.
Cost and benefit analysis of changes in minimum capital requirements entails considerable measurement problems. On the cost side, it can be difficult to attribute particular expenditures incurred by institutions to the costs of implementation because banking organizations would likely incur some of these costs as part of their ongoing efforts to improve risk measurement and management systems. On the benefits side, measurement problems are even greater because the benefits of the proposal are more qualitative than quantitative. Measurement problems exist even with an apparently measurable benefit like lower minimum capital because lower minimum requirements do not necessarily mean lower capital. Healthy banking organizations generally hold capital well above regulatory minimums for a variety of reasons, and the effect of reducing the regulatory minimum is uncertain and may vary across regulated institutions.
- Better allocation of capital and reduced impact of moral hazard through reduction in the scope for regulatory arbitrage: By assessing the amount of capital required for each exposure or pool of exposures, the advanced approach does away with the simplistic risk buckets of current capital rules. Eliminating categorical risk weighting and assigning capital based on measured risk instead greatly curtails or eliminates the ability of troubled organizations to �game� regulatory capital requirements by finding ways to comply technically with the requirements while evading their intent and spirit.
- Improved signal quality of capital as an indicator of solvency: The advanced approaches of the proposed rule are designed to more accurately align regulatory capital with risk, which should improve the quality of capital as an indicator of solvency. The improved signaling quality of capital will enhance banking supervision and market discipline.
- Encourages banking organizations to improve credit risk management: One of the principal objectives of the proposed rule is to more closely align capital charges and risk. For any type of credit, risk increases as either the probability of default or the loss given default increases. Under the proposed rule, risk weights depend on these risk measures and consequently capital requirements will more closely reflect risk. This enhanced link between capital requirements and risk will encourage banking organizations to improve credit risk management.
- More efficient use of required bank capital: Increased risk sensitivity and improvements in risk measurement will allow prudential objectives to be achieved more efficiently. If capital rules can better align capital with risk across the system, a given level of capital will be able to support a higher level of banking activity while maintaining the same degree of confidence regarding the safety and soundness of the banking system. Social welfare is enhanced by either the stronger condition of the banking system or the increased economic activity the additional banking services facilitate.
- Incorporates and encourages advances in risk measurement and risk management: The proposed rule seeks to improve upon existing capital regulations by incorporating advances in risk measurement and risk management made over the past 15 years. An objective of the proposed rule is to speed adoption of new risk management techniques and to promote the further development of risk measurement and management through the regulatory process.
- Recognizes new developments and accommodates continuing innovation in financial products by focusing on risk: The proposed rule also has the benefit of facilitating recognition of new developments in financial products by focusing on the fundamentals behind risk rather than on static product categories.
- Better aligns capital and operational risk and encourages banking organizations to mitigate operational risk: Introducing an explicit capital calculation for operational risk eliminates the implicit and imprecise �buffer� that covers operational risk under current capital rules. Introducing an explicit capital requirement for operational risk improves assessments of the protection capital provides, particularly at organizations where operational risk dominates other risks. The explicit treatment also increases the transparency of operational risk, which could encourage banking organizations to take further steps to mitigate operational risk.
- Enhanced supervisory feedback: Although U.S. banking organizations have long been subject to close supervision, aspects of all three pillars of the proposed rule aim to enhance supervisory feedback from Federal banking agencies to managers of banks and thrifts. Enhanced feedback could further strengthen the safety and soundness of the banking system.
- Incorporates market discipline into the regulatory framework: The proposed rule seeks to introduce market discipline directly into the regulatory framework by requiring specific disclosures relating to risk measurement and risk management. Market discipline could complement regulatory supervision to bolster safety and soundness.
- Preserves the benefits of international consistency and coordination achieved with the 1988 Basel Accord: An important objective of the 1988 Accord was competitive consistency of capital requirements for banking organizations competing in global markets. Basel II continues to pursue this objective. Because achieving this objective depends on the consistency of implementation in the United States and abroad, the Basel Committee has established an Accord Implementation Group to promote consistency in the implementation of Basel II.
- Ability to opt in offers long-term flexibility to nonmandatory banking organizations: The proposed U.S. implementation of Basel II allows banking organizations outside of the mandatory group to individually judge when the benefits they expect to realize from adopting the advanced approaches outweigh their costs. Even though the cost and complexity of adopting the advanced approaches may present nonmandatory organizations with a substantial hurdle to opting in at present, the potential long-term benefits of allowing nonmandatory organizations to partake in the benefits described above may be similarly substantial.
Because banking organizations are constantly developing programs and systems to improve how they measure and manage risk, it is difficult to distinguish between expenditures explicitly caused by adoption of the proposed rule and costs that would have occurred irrespective of any new regulation. In an effort to identify how much banking organizations expect to spend to comply with the U.S. implementation of Basel II, the Federal banking agencies included several questions related to compliance costs in QIS-4.87
- Overall Costs: According to the 19 out of 26 QIS-4 questionnaire respondents that provided estimates of their implementation costs, organizations will spend roughly $42 million on average to adapt to capital requirements implementing Basel II. Not all of these respondents are likely mandatory organizations. Counting just the likely mandatory organizations, the average is approximately $46 million, so there is little difference between organizations that meet a mandatory threshold and those that do not. Aggregating estimated expenditures from all 19 respondents indicates that these organizations will spend a total of $791 million over several years to implement the proposed rule. Estimated costs for nine respondents meeting one of the mandatory thresholds come to $412 million.
- Estimate of costs specific to the proposal: Ten QIS-4 respondents provided estimates of the portion of costs they would have incurred even if current capital rules remain in effect. Those ten indicated that they would have spent 45 percent on average, or roughly half of their Basel II expenditures on improving risk management anyway. This suggests that of the $42 million organizations expect to spend on implementation, approximately $21 million may represent expenditures each institution would have undertaken even without Basel II. Thus, pure implementation costs may be closer to roughly $395 million for the 19 QIS-4 respondents.
- Ongoing costs: Seven QIS-4 respondents were able to estimate what their recurring costs might be under the proposed implementation of Basel II. On average, the seven organizations estimate that annual recurring expenses attributable to the proposed capital framework will be $2.4 million. Organizations indicated that the ongoing costs to maintain related technology reflect costs for increased personnel and system maintenance. The larger one-time expenditures primarily involve money for system development and software purchases.
- Implicit costs: In addition to explicit setup and recurring costs, banking organizations may also face implicit costs arising from the time and inconvenience of having to adapt to new capital regulations. At a minimum this involves the increased time and attention required of senior bank and thrift management to introduce new programs and procedures and the need to closely monitor the new activities during the inevitable rough patches when the proposed rule first takes effect.
- Government administrative costs: OCC expenditures fall into three broad categories: training, guidance, and supervision. Training includes expenses for AMA workshops, IRB workshops, and other training courses and seminars for examiners. Guidance expenses reflect expenditures on the development of IRB and AMA guidance. Supervision expenses reflect organization-specific supervisory activities related to the development and implementation of the Basel II framework. The largest OCC expenditures have been on the development of IRB and AMA policy guidance. The $4.6 million spent on guidance represents 65 percent of the estimated total OCC Basel II-related expenditure of $7.1 million through the 2005 fiscal year. In part, this large share reflects the absence of data for training and supervision costs for several years, but it also is indicative of the large guidance expenses in 2002 and 2003 when the Basel II framework was in development. To date, Basel II expenditures have not been a large part of overall OCC expenditures. The $3 million spent on Basel II in fiscal year 2005 represents less than one percent of the OCC�s $519 million budget for the year.
- Total cost: The OCC�s estimate of the total cost of the proposed rule includes expenditures by banking organizations and the OCC from the present through 2011, the final year of the transition period. Combining expenditures by mandatory banking organizations and the OCC provides a present value estimate of $545.9 million for the total cost of the proposed rule.
- Procyclicality: Procyclicality refers to the possibility that banking organizations may reduce lending during economic downturns and increase lending during economic expansions as a consequence of minimum capital requirements. There is some concern that the risk-sensitivity of the IRB approach may cause capital requirements for credit risk to increase during an economic downturn. Although procyclicality may be inherent in banking to some extent, elements of the advanced approaches could reduce inherent procyclicality. Risk management and information systems may provide bank managers with more forward-looking information about risk that would allow them to adjust portfolios gradually and with more foresight as the economic outlook changes over the business cycle. Regulatory stress-testing requirements included in the proposal also will help ensure that institutions anticipate cyclicality in capital requirements to the greatest extent possible, reducing the potential economic impact of changes in capital requirements.
One potential concern with any regulatory change is the possibility that it might create a competitive advantage for some organizations relative to others, a possibility that certainly applies to a change with the scope of this proposed rule. However, measurement difficulties described in the preceding discussion of costs and benefits also extend to any consideration of the impact on competition. Despite the inherent difficulty of drawing definitive conclusions, this section considers various ways in which competitive effects might be manifest, as well as available evidence related to those potential effects.
- Explicit Capital for Operational Risk: Some have noted that the explicit computation of required capital for operational risk could lead to an increase in total minimum regulatory capital for U.S. "processing" banks, generally defined as banking organizations that tend to engage in a variety of activities related to securities clearing, asset management, and custodial services. Some have suggested that the increase in required capital could place such firms at a competitive disadvantage relative to competitors that do not face a similar capital requirement. A careful analysis by Fontnouvelle et al88 considers the potential competitive impact of the explicit capital requirement for operational risk. Overall, the study concludes that competitive effects from an explicit operational risk capital requirement should be, at most, extremely modest.
- Residential Mortgage Lending: The issue of competitive effects has received substantial attention with respect to the residential mortgage market. The focus on the residential mortgage market stems from the size and importance of the market in the United States and the fact that the proposed rule may lead to substantial reductions in credit-risk capital for residential mortgages. To the extent that corresponding operational-risk capital requirements do not offset these credit-risk-related reductions, overall capital requirements for residential mortgages could decline under the proposed rule. Studies by Calem and Follain89 and Hancock, Lehnert, Passmore, and Sherlund90 suggest that banking organizations operating under capital rules based on Basel II may increase their holdings of residential mortgages. Calem and Follain argue that the increase would be significant and come at the expense of general organizations. Hancock et al. foresee a more modest increase in residential mortgage holdings at institutions operating under the new Basel II-based rules, and they see this increase primarily as a shift away from the large government sponsored mortgage enterprises.
- Small Business Lending: One potential avenue for competitive effects is small-business lending. Smaller banks � those that are less likely to adopt the advanced approaches to regulatory capital under the proposed rule � tend to rely more heavily on smaller loans within their commercial loan portfolios. To the extent that the proposed rule reduces required capital for such loans, general banking organizations not operating under the proposed rule might be placed at a competitive disadvantage. A study by Berger91 finds some potential for a relatively small competitive effect on smaller banks in small business lending. However, Berger concludes that the small business market for large banks is very different from the small business market for smaller banks. For instance, a �small business� at a larger banking organization is usually much larger than small businesses at community banking organizations.
- Mergers and Acquisitions: Another concern related to potential changes in competitive conditions under the proposed rule is that bifurcation of capital standards might change the landscape with regard to mergers and acquisitions in banking and financial services. For example, banking organizations operating under the new Basel II-based capital requirements might be placed in a better position to acquire other banking organizations operating under the non-Basel II-based rules, possibly leading to an undesirable consolidation of the banking sector. Research by Hannan and Pilloff92 suggests that the proposed rule is unlikely to have a significant impact on merger and acquisition activity in banking.
- Credit Card Competition: The proposed U.S. implementation of Basel II might also affect competition in the credit card market. Overall capital requirements for credit card loans could increase under the proposed rule. This raises the possibility of a change in the competitive environment among banking organizations subject to the new Basel II-based capital rules, nonbank credit card issuers, and banking organizations not subject to the new Basel II-based capital rules. A study by Lang, Mester, and Vermilyea93 finds that implementation of a rule based on Basel II will not affect credit card competition at most community and regional banking organizations. The authors also suggest that higher capital requirements for credit cards may only pose a modest disadvantage to institutions that are subject to rules based on Basel II.
Overall, the evidence regarding the impact of the proposed rule on competitive equity is mixed. The body of recent economic research discussed in the body of this report does not reveal persuasive evidence of any sizeable competitive effects. Nonetheless, the Federal banking agencies recognize the need to closely monitor the competitive landscape subsequent to any regulatory change. In particular, the OCC and other Federal banking agencies will be alert for early signs of competitive inequities that might result from this proposed rule. A multi-year transition period before full implementation of proposed rules based on Basel II should provide ample opportunity for the agencies to identify any emerging problems. To the extent that undesirable competitive inequities emerge, the agencies have the power to respond to them through many channels, including but not limited to suitable changes to the capital adequacy regulations.
Executive Order 12866 requires a comparison between the proposed rule, a baseline of what the world would look like without the proposed rule, and several reasonable alternatives to the proposed rule. In this regulatory impact analysis, we analyze two baselines and three alternatives to the proposed rule. We consider two baselines because of two very different outcomes that depend on the capital rules that other countries with internationally active banks might adopt absent the implementation of the Basel II framework in the United States.94 The first baseline considers the possibility that neither the United States nor these other countries adopt capital rules based on the Basel II framework. The second baseline analyzes the situation where the United States does not adopt the proposed rule, but the other countries with internationally active banking organizations do adopt Basel II.
- Baseline Scenario 1: Current capital standards based on the 1988 Basel Accord continue to apply both here and abroad: Abandoning the Basel II framework in favor of current capital rules would eliminate essentially all of the benefits of the proposed rule described earlier. In place of these lost or diminished benefits, the only advantage of continuing to apply current capital rules to all banking organizations is that maintaining the status quo should alleviate concerns regarding competition among financial service providers. Although the effect of the proposed rule on competition is uncertain in our estimation, staying with current capital rules (or universally applying a revised rule that might emerge from the Basel IA ANPR) eliminates bifurcation and the explicit assignment of capital for operational risk. Concerns regarding competition usually center on these two characteristics of the proposed rule. While continuing to use current capital rules eliminates most of the benefits of adopting the proposed capital rule, it does not eliminate many costs associated with Basel II. Because Basel II costs are difficult to separate from the banking organization�s ordinary development costs and ordinary supervisory costs at the agencies, dropping the proposal to implement Basel II would reduce but not eliminate many of these costs associated with the proposed rule.95
- Baseline Scenario 2: Current capital standards based on the 1988 Basel Accord continue to apply in the United States, but the rest of the world adopts the Basel II framework: Like the first baseline scenario, abandoning a framework based on Basel II in favor of current capital rules would eliminate essentially all of the benefits of the proposed rule described earlier. Like the first baseline scenario, the one advantage of this scenario is that there would be no bifurcation of capital rules within the United States. However, the emergence of different capital rules across national borders would at least partially offset this advantage. Thus, while concerns regarding competition among U.S. financial service providers might diminish in this scenario, concerns regarding cross-border competition would likely increase. Just as the first baseline scenario eliminated most of the benefits of adopting the proposed rule, the same holds true for the second baseline scenario with one important distinction. Because the United States would be operating under a set of capital rules different from the rest of the world, U.S. banking organizations that are internationally active may face higher costs because they will have to track and comply with more than one set of capital requirements.
- Alternative A: Permit U.S. banking organizations to choose among all three Basel II credit risk approaches: The principal benefit of Alternative A that the proposed rule does not achieve is the increased flexibility of the regulation for banking organizations that would be mandatory banking organizations under the proposed rule. Banking organizations that are not prepared for the adoption of the advanced IRB approach to credit risk under the proposed rule could choose to use the foundation IRB approach or even the standardized approach. How Alternative A might affect benefits depends entirely on how many banking organizations select each of the three available options. The most significant drawback to Alternative A is the increased cost of applying a new set of capital rules to all U.S. banking organizations. The vast majority of banking organizations in the United States would incur no direct costs from new capital rules under the proposed rule. Under Alternative A, direct costs would increase for every U.S. banking organization that would have continued with current capital rules under the proposed rule. Although it is not clear how high these costs might be, general banking organizations would face higher costs because they would be changing capital rules regardless of which option they choose under Alternative A.
- Alternative B: Permit U.S. banking organizations to choose among all three Basel II operational risk approaches: The operational risk approach that banking organizations ultimately selected would determine how the overall benefits of the new capital regulations would change under Alternative B. Just as Alternative A increases the flexibility of credit risk rules for mandatory banking organizations, Alternative B is more flexible with respect to operational risk. Because the Standardized Approach tries to be more sensitive to variations in operational risk than the Basic Indicator Approach and the AMA is more sensitive than the Standardized Approach, the effect of implementing Alternative B depends on how many banking organizations select the more risk sensitive approaches. As was the case with Alternative A, the most significant drawback to Alternative B is the increased cost of applying a new set of capital rules to all U.S. banking organizations. Under Alternative B, direct costs would increase for every U.S. banking organization that would have continued with current capital rules under the proposed rule. It is not clear how much it might cost banking organizations to adopt these capital measures for operational risk, but general banking organizations would face higher costs because they would be changing capital rules regardless of which option they choose under Alternative B.
- Alternative C: Use a different asset amount to determine a mandatory organization: The number of mandatory banking organizations decreases slowly as the size thresholds increase, and the number of banking organizations grows more quickly as the thresholds decrease. Under Alternative C, the framework of the proposed rule would remain the same and only the number of mandatory banking organizations would change. Because the structure of the proposed implementation would remain intact, Alternative C would capture all of the benefits of the proposed rule. However, because these benefits derive from applying the proposed rule to individual banking organizations, changing the number of banking organizations affected by the rule will change the cumulative level of the benefits achieved. Generally, the benefits associated with the proposed rule will rise and fall with the number of mandatory banking organizations. Because Alternative C would change the number of mandatory banking organizations subject to the proposed rule, aggregate costs will also rise or fall with the number of mandatory banking organizations.
The Basel II framework and its proposed U.S. implementation seek to incorporate risk measurement and risk management advances into capital requirements. On the basis of their analysis, the agencies believe that the benefits of the proposed rule are significant, durable, and hold the potential to increase with time. The offsetting costs of implementing the proposed rule are also significant, but appear to be largely because of considerable start-up costs. However, much of the apparent start-up costs reflect activities that the banking organizations would undertake as part of their ongoing efforts to improve the quality of their internal risk measurement and management, even in the absence of Basel II and this proposed rule. The advanced approaches seem to have fairly modest ongoing expenses. Against these costs, the significant benefits of Basel II suggest that the proposed rule offers an improvement over either of the two baseline scenarios.
With regard to the three alternative approaches we consider, the proposed rule seems to offer an important degree of flexibility while significantly restricting the cost of the proposed rule by limiting its application to large, complex, internationally active banking organizations. Alternatives A and B introduce more flexibility from the perspective of the large mandatory banking organizations, but each is less flexible with respect to other banking organizations. Either Alternative A or B would compel these banking organizations to select a new set of capital rules and require them to undertake the time and expense of adjusting to these new rules. Alternative C would change the number of mandatory banking organizations. If the number of mandatory banking organizations increases, then the new rule would lose some of the flexibility the proposed rule achieves with the opt-in option. Furthermore, costs would increase as the new rule would compel more banking organizations to incur the expense of adopting the advanced approaches. Decreasing the number of mandatory banking organizations would decrease the aggregate social good of each benefit achieved with the proposed rule. The proposed rule seems to offer a better balance between costs and benefits than any of the three alternatives.
- Executive Order 12866 (September 30, 1993), 58 FR 51735 (October 4, 1993), as amended by Executive Order 13258, 67 FR 9385 (February 28, 2002). For the complete text of the definition of "significant regulatory action," see E.O. 12866 at � 3(f). A "regulatory action" is "any substantive action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking." E.O. 12866 at � 3(e). Return to text
- For more information on QIS-4, see Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of Thrift Supervision, �Summary Findings of the Fourth Quantitative Impact Study,� February 2006, available online at http://www.occ.treas.gov/ftp/release/2006-23a.pdf. Return to text
- Patrick de Fontnouvelle, Victoria Garrity, Scott Chu, and Eric Rosengren, �The Potential Impact of Explicit Operational Risk Capital Charges on Bank Processing Activities,� Manuscript, Federal Reserve Bank of Boston, January 12, 2005. Available at www.federalreserve.gov/generalinfo/basel2/whitepapers.htm. Return to text
- Paul S. Calem and James R. Follain, �An Examination of How the Proposed Bifurcated Implementation of Basel II in the U.S. May Affect Competition Among Banking Organizations for Residential Mortgages,� manuscript, January 14, 2005. Return to text
- Diana Hancock, Andreas Lehnert, Wayne Passmore, and Shane M. Sherlund, �An Analysis of the Potential Competitive Impact of Basel II Capital Standards on U.S. Mortgage Rates and Mortgage Securitization�, Federal Reserve Board manuscript, April 2005. Available at www.federalreserve.gov/generalinfo/basel2/whitepapers.htm. Return to text
- Allen N. Berger, �Potential Competitive Effects of Basel II on Banks in SME Credit Markets in the United States,� Federal Reserve Board Finance and Economics Discussion Series, 2004-12. Available at www.federalreserve.gov/generalinfo/basel2/whitepapers.htm. Return to text
- Timothy H. Hannan and Steven J. Pilloff, �Will the Proposed Application of Basel II in the United States Encourage Increased Bank Merger Activity? Evidence from Past Merger Activity,� Federal Reserve Board Finance and Economics Discussion Series, 2004-13. Available at www.federalreserve.gov/generalinfo/basel2/whitepapers.htm. Return to text
- William W. Lang, Loretta J. Mester, and Todd A. Vermilyea, �Potential Competitive Effects on U.S. Bank Credit Card Lending from the Proposed Bifurcated Application of Basel II,� manuscript, December 2005. Available at www.federalreserve.gov/generalinfo/basel2/whitepapers.htm. Return to text
- In addition to the United States, members of the Basel Committee on Banking Supervision considering Basel II are Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, and the United Kingdom. Return to text
- Cost estimates for adopting a rule that might result from the Basel IA ANPR are not currently available. Return to text