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Old 11-15-2012, 09:05 AM   #21
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Friday, November 9, 2012, 2:58pm CST

Federal banking regulators today announced they will delay the Basel III capital requirements.
...
Many industry participants have expressed concern that they may be subject to a final regulatory capital rule on Jan. 1, without sufficient time to understand the rule or to make necessary systems changes, the Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency said in a joint press release
...
The federal agencies said they haven’t determined new implementation dates and associated transition periods.
http://www.bizjournals.com/birmingha...uirements.html

Press release:
Quote :
The U.S. federal banking agencies issued three notices of proposed rulemaking in June that would revise and replace the current regulatory capital rules. The proposals suggested an effective date of January 1, 2013. Many industry participants have expressed concern that they may be subject to a final regulatory capital rule on January 1, 2013, without sufficient time to understand the rule or to make necessary systems changes.

In light of the volume of comments received and the wide range of views expressed during the comment period, the agencies do not expect that any of the proposed rules would become effective on January 1, 2013. As members of the Basel Committee on Banking Supervision, the U.S. agencies take seriously our internationally agreed timing commitments regarding the implementation of Basel III and are working as expeditiously as possible to complete the rulemaking process. As with any rule, the agencies will take operational and other considerations into account when determining appropriate implementation dates and associated transition periods.
http://www.fdic.gov/news/news/press/2012/pr12130.html
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Old 11-15-2012, 09:11 AM   #22
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And this was announced two days after the election.
I'm looking forward to more post-election surprises.
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Old 11-17-2012, 10:02 AM   #23
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On November 9, 2012, the US federal banking agencies released a joint press release indefinitely delaying the January 1, 2013 implementation date for their proposed rules that would revise and replace the current regulatory capital rules according to Basel III and certain provisions of Dodd-Frank
......
Meanwhile, on November 9, 2012, the EU issued a press release stating that it still plans to meet the January 1, 2013 deadline, despite industry concerns that the January 1 deadline may be unrealistic.
http://us.practicallaw.com/8-522-3973

Quote :
SHANGHAI: China will not postpone implementation of tougher global bank capital rules despite a delay in compliance by U.S. banks, the official Shanghai Securities News reported on Tuesday, citing unidentified sources.
...
http://articles.economictimes.indiat...payer-bailouts
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Old 11-19-2012, 08:55 AM   #24
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Decent summary of the Basel III call for changing gold to tier one status:

http://seekingalpha.com/article/1016...l-iii-and-gold
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Old 11-19-2012, 09:08 AM   #25
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Fun fact:

One of the reason U.S. banks are dragging their heels on this one is because of the reserve requirement on highly levered loans. Once Basel III comes into effect, most loans with less than 20% down will go away.

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Old 11-19-2012, 09:09 AM   #26
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If that's the case, Basel III will never be (fully) implemented in the USA.
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Old 11-19-2012, 09:11 AM   #27
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Originally Posted by benjamen View Post:
Fun fact:

One of the reason U.S. banks are dragging their heels on this one is because of the reserve requirement on highly levered loans. Once Basel III comes into effect, most loans with less than 20% down will go away.

Go away for who? The loan-taker?
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Old 11-19-2012, 09:33 AM   #28
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Originally Posted by mike View Post:
Go away for who? The loan-taker?
The banks would no longer offer them, or more likely make them much more expensive.
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Old 11-19-2012, 11:03 AM   #29
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That is already happening with private loans here in Central Florida anyway. I dare you to apply for a mortgage with less than 15 - 20% of your own hide in the game. The credit union already halved my loan line [not that I use it, but it looks good on my credit statement] and reduced my unsecured credit by a third.
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Old 11-19-2012, 11:09 AM   #30
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Originally Posted by benjamen View Post:
Once Basel III comes into effect, most loans with less than 20% down will go away.
...am I the only one, who sees that requirement as EXTREMELY bearish for house prices, if implemented?

Putting up 20% of price of 500k house, is something entirely different, than putting up 20% of a 100k one (difficult enough for many...).

I personally think, that "no-significant upfront payment required" rule, is one that is MOST responsible for pushing house prices up, artificially. And it is putting pressure on prudent people (artificial competition on houses and mortgages from non-prudent ones).
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Old 11-19-2012, 11:51 AM   #31
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I see it too Bushi, and as far as I am concerned it is the thing we need in banking to control these fuckers. Loaning huge sums of money to folks with little or no skin in the game is insane.
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Old 11-19-2012, 12:07 PM   #32
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Originally Posted by ancona View Post:
I see it too Bushi, and as far as I am concerned it is the thing we need in banking to control these fuckers. Loaning huge sums of money to folks with little or no skin in the game is insane.
If left to their own devices, no bank would provide these risky loans (at least the ones that would last more than a few years). There is a clear downtrend in rates of default in mortgages that the buyer puts at least 20% down. Interestingly, banks would probably not even do 30 year loans in a free market due to the long duration interest rate risks involved; anyone old enough to remember 10-20 year mortgages being the norm?

This leaves us with why any bank that wants to remain in business long term would do such a thing. Enter the perverse incentives of the U.S. government. This is the government that decided that it is not okay for a bank to refuse to provide mortgage loans to citizens simply because they don't have the financial means to repay said loan. Home ownership must be encouraged for every family in the country regardless of income, actually having a job, credit score, or other silly financial metrics.

Enter VA and FHA type loans! These program turn the banks away from the position of a lender and towards a position of paperwork filler out guy. All the bank does is lend to whoever the government thinks should have a loan and then immediately turn around and sell that loan to Frannie, Freddie, ect. Everyone must have a home loan with 3-4% down at most!

If the bank doesn't like this system, then good luck getting that governmental approval to expand your bank to a new state. Good luck passing that next FINRA, SEC, or FED inspection!

When the whole system blows up in their faces, the government blames the mean ole bankers! It is loudly declared that the problem is to big to fail banks. The obvious solution is for the government to bail out the bigger banks, prod them to merge into fewer, even bigger mega banks. Follow this up with the awesome Dodd-Frank act that is effectively killing medium sized banks, awesome! If your small enough Dodd-Frank doesn't apply to you. Once you are big enough, the immense cost of all the new regulations makes it hard to bear until you are much larger, which is prompting a lot of medium banks to begin to merge into bigger banks!
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Old 11-26-2012, 08:09 PM   #33
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So a basic question I have is:

If Basel III is coming orur way, why haven't we seen the major impacts already happening?

With gold becoming Tier 1 I would expect everyone to be jumping on it. Maybe the smart ones are already, though I would expect gold prices to be moving up more than they are now.

I agree with bushi that this should really clobber real estate. On the one hand, people who are solvent and looking for a house would want to wait until prices drop once nobody else can get a mortgage. On the other, anyone who is smart enough to know this and not solvent enough to put 20% down would be rushing out to buy now.

Are the banks still pushing cheapy loans while they can and then plan to collect the collateral once Basel hits?
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Old 11-27-2012, 07:03 AM   #34
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Originally Posted by dontdeBasemebro View Post:
...
If Basel III is coming orur way, why haven't we seen the major impacts already happening?
...
I think the public is still largely ignorant. Why haven't hedge funds moved the needle? I'm guessing they are buying paper gold (etfs) if they are buying any at all (ie. not physical and not futures contracts). That isn't going to affect the spot price or cause any supply strain. There is some evidence that banks are shoring up gold holdings, but it's hard to say if it's real, physical gold, or rehypothecated (LBMA) claims.
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Old 01-10-2013, 10:20 AM   #35
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Originally Posted by Jim Sinclair :
The entire reason for the agreed delay of the Basel Three liquidity requirements is the Western financial system’s balance sheets. They are cartoons because of FASB blessing of debatable values for paper assets such as OTC derivatives with absolutely no market relationship.

Put succinctly, the Western world financial system simply does not have the ability in terms of real liquidity to meet Basel Three requirements. That is the entire story. The tomes written on this should be but one line – bankrupts cannot meet liquidity requirement now or in two years from now.
...
http://www.jsmineset.com/2013/01/09/...rement-delays/
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Old 04-29-2013, 07:18 AM   #36
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Quote :
... the Terminating Bailouts for Taxpayer Fairness Act, emerged last Wednesday; its co-sponsors are Sherrod Brown, an Ohio Democrat, and David Vitter, a Louisiana Republican. ...

For starters, the bill would create an entirely new, transparent and ungameable set of capital rules for the nation’s banks — in other words, a meaningful rainy-day fund. Enormous institutions, like JPMorgan Chase and Citibank, would have to hold common stockholder equity of at least 15 percent of their consolidated assets to protect against large losses. That’s almost double the 8 percent of risk-weighted assets required under the capital rules established by Basel III, the latest version of the byzantine international system created by regulators and central bankers.
...
The bill prevents another type of fudging by requiring off-balance-sheet assets and liabilities and derivatives positions to be included in a bank’s consolidated assets. In addition, the capital cushion that a bank would hold under the bill is liquid and can absorb losses easily. This capital measure would be more transparent than the current system and could not be manipulated.

In a truly courageous move, Brown-Vitter would require United States financial regulators to abandon Basel III. An earlier version of Basel did nothing to prevent the financial crisis and encouraged banks to binge on leverage.
...
Brown-Vitter has other attributes as well. It would bar bank regulators from giving nondepository institutions access to Federal Reserve lending programs. And it would make it harder for bank holding companies to move assets or liabilities from nonbanking affiliates, like derivatives bets held at a brokerage unit, to the protective umbrella of the parent company that might be rescued by taxpayers in a financial disaster.

Thomas M. Hoenig, the vice chairman of the Federal Deposit Insurance Corporation, supports the bill. ...
More: http://www.nytimes.com/2013/04/28/bu...=business&_r=0

No word on how this bill might affect gold being considered a tier one asset.
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Old 08-22-2013, 04:28 PM   #37
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I was just watching Fox Business News (FBN) and they were showing someone interviewing Jack Lew (current Treasury Secretary). He (Mr. Lew) was talking about a recent meeting he had at the White House with the President and "market regulators". While talking about their progress on implementing Dodd-Frank requirements, Mr. Lew said (and I'm paraphrasing):

We checked to see where were were versus Basel III - whether we were above, below, etc. And we're ahead.

Ie. the USA is ahead of schedule (or ahead of the rest of the world) in complying with Basel III requirements.

WTF?
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Old 08-22-2013, 04:42 PM   #38
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I did some searching around and found this (published Aug. 6):
Quote :
New rules from the Federal Reserve will significantly alter how banks account for taxes on some assets, especially at large institutions.

New standards change the math behind whether taxes can be deferred on some items when banks compute how much capital they have. If deferrals are removed, the result can be a significant reduction in the size of a bank’s balance sheet -- possibly making it look less stable, Bloomberg BNA reported.

The rules, which will force companies to perform a far more complex calculation of deferred tax assets and liabilities, are part of the heightened capital standards for U.S. banks known as Basel III -- rules drawn up by global regulators intended to make the financial system safer after the collapse of Lehman Brothers Holdings Inc. They are meant to help community lenders, while taking a stricter line with large banks.

“The new focus of tax planning will be to effectively manage a bank’s deferred tax position to enhance regulatory capital,” said Liz L’Hommedieu, KPMG LLP’s tax managing director for its Washington National Tax practice.

The new regime goes into effect Jan. 1 for the largest banks -- those with assets greater than $250 billion or with more than $10 billion in foreign exposures, such as Bank of America Corp., JPMorgan (JPM) Chase & Co. or Wells Fargo (WFC) & Co. Smaller banks have until 2015.

The idea behind the rules, issued last month, is to provide more uniformity in the 27 countries of the Basel Committee on Banking Supervision -- so banks in France, Hong Kong or the U.S. can run comparable analyses of capital profiles, said John Taylor, partner with the Financial Services Tax Practice at EY.
...
http://www.bloomberg.com/news/2013-0...iii-taxes.html

Looks like they are still slowly crawling along towards implementing it - at least parts of it. I aloso found this from February:
Quote :
... the possibility that the Bank of International Settlements would modify the Basel III accord to include gold as a Tier 1 asset. ...

The change as proposed would have gone into effect January of this year. There had been much written about it in the last year so I was surprised not to read anything this year about the change. When I dug around the BIS website I could find no press releases announcing this monumental change in banking. Turns out for good reason. It didn't happen.


From the FAQ's document at the BIS website, page 22 of the PDF:
Quote :
4.2 Basel II paragraph 145 sets forth a list of eligible financial collateral that includes gold, with a supervisory haircut set to 15% in paragraph 151. To the extent that gold is not included in the revised paragraph 151 under Basel III, industry seeks clarifications in this regard.

Paragraph 145 has not been modified by Basel III and so, gold remains as eligible collateral.

It was an oversight not to include gold in the headings of paragraph 151. Gold is still eligible collateral and it retains the haircut it previously had of 15%.
I have to admit I'm somewhat confused given my understanding was that gold was valued at 50% prior to Basel III rather than 85% (100%-15% haircut). Regardless, the key words are, "retains the haircut it previously had", meaning the BIS has not officially changed its view on gold. Its interesting that the change did not happen as expected and that it apparently has happened very quietly. ...
http://macrowealthpreservation.blogs...t-for-now.html
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Old 08-23-2013, 09:41 AM   #39
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Quote :
...
Lenders including UBS AG and HSBC Holdings Plc have warned that plans by global regulators in the Basel Committee on Banking Supervision to set minimum collateral requirements for non-centrally cleared swaps trades will prompt a global liquidity squeeze as banks struggle to locate enough securities to satisfy the standards.
...
http://www.bloomberg.com/news/2013-0...po-trades.html
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Old 10-20-2015, 09:33 AM   #40
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Quote :
...
The rules treat physically traded gold the same as other commodities, meaning banks trading the metal would have to carry more cash and cash equivalents as a proportion of their gold exposures to act as a buffer if there is an adverse move in the gold price.

In Basel III's language, gold's liquidity "haircut" is increasing to 85 percent from 50 percent. This percentage is used to help calculate a so-called liquidity buffer known as the net stable funding ratio (NSFR) that all banks must hold from 2018. The higher the figure, the more funding is needed to meet the overall NSFR requirement.

This, the LBMA and other industry bodies argue, makes funding gold transactions for commercial banks difficult and increases the cost of doing business.

"Basel III is a big issue for us at the moment, because we are looking at an increase in costs of up to 300 percent and ... that is a kind of cost that makes you decide to get out of the business," LBMA Chief Executive Ruth Crowell told reporters at a conference in Vienna in Monday.

"And whilst there is not a lot of sympathy for banks, it's the clients of these banks that are going to suffer from that, producers, manufacturers, refiners."

The rules come into full force in 2019, but regulatory and market pressure has prompted lenders to comply sooner.

The LBMA has asked the European Banking Authority (EBA) to reconsider gold as a "high quality, liquid asset."
...
http://www.reuters.com/article/2015/...12J3CS20151019

So, it seems that we understood it backwards - gold isn't going to be valued at 85%, it's going to be valued at 15%. 85% is the value of cash they need to hold in reserve to cover the value of the gold (in case the market/price crashed).

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