Initial Reactions to the new Basel Committee Recommendations

I'm hearing some of the first reactions to the new rules posted by the Basel Committee last week. These basically tell bankers what the rules are, and specifically how much capital they have to hold in reserve against losses in their lending and trading activities. Quite a few folks have made the argument that the last set of rules, which assumed that bankers were rational and responsible, didn't work. Don't think there's much question about that.

Here's some interesting posts and news articles I've come across so far:

Sent in by a London colleague -- a blog report by the BBC's business editor with some comments from readers across the pond ...

A story in Friday's Financial Times had a couple of interesting quotes:

Joachim Müller, banking analyst at Cheuvreux, part of Crédit Agricole, said: “They are very harsh on the definition side but they are more moderate on the implementation side because they allow for phasing in. It is a good balance between strict reg-ulation and allowing for growth.”

The Nomura banking analysts also took heart from the schedule, writing: “We feel that the Basel committee has a proposed set of rules that are very stringent in the first reading but the caveats on timeline and grandfathering means that the final proposals are likely to be watered down.”

Really gotta love the way in which certain language translations allow things to come through in ways that a native speaker might think twice about ... In Hong Kong in 2008 I heard a senior official at an Exchange talking about how they viewed one part of their business as a "cash cow to be milked". Had also heard the term used by another non-english speaker use the term "cash cow" in front of his customers the prior year in the States.

The full Basel Committee draft is here.

More on this later, after we've had a chance to dig into the details a bit ...