Oleander Ardens
11-06-2008, 22:15
TESTIMONY OF
MICHAEL J. ALIX
SENIOR MANAGING DIRECTOR
BEAR STEARNS & CO, INC.
THE NEW BASEL ACCORD:
PRIVATE SECTOR PERSPECTIVES
BEFORE THE
HOUSE FINANCIAL SERVICES COMMITTEE
SUBCOMMITTEE ON FINANCIAL INSTITUTIONS
AND CONSUMER CREDIT
JUNE 22, 2004
........
As investment banks began to comprehend the impact of Basel II across their global
businesses, it became clear that the commercial-bank oriented approach, as reflected in the
Accord’s third consultative paper, could be problematic.The composition of businesses typical
of a major investment bank varies considerably from those typical of a traditional commercial
bank – for example greater focus on short-term trading and secured financing, less (if any)
emphasis on hold-to-maturity lending – and the investment banks observed that the apparent
Basel II capital requirements (OA: more capital required) for some of their key businesses were out of line with perceived risk and actual loss experience. Outsized capital requirements could cause firms to reduce activity (and by extension liquidity) in certain securities markets, so it was critical that the
investment banks’ concerns be addressed.
On the USA's CSE framework:
Another key benefit is that firms that choose to register under CSE will have to demonstrate group-wide adherence to rigorous risk management practices. Reaffirming the old adage of “no pain, no gain,” firms starting the application process report that the exercise is arduous, but also say that the result is sure to be further enhancement of regulators’ confidence that there is a documented set of robust and resilient risk management practices and internal controls in place at these firms.
BTW: Guess who (http://uk.reuters.com/article/bankingfinancial-SP/idUKN0437333520081104?feedType=RSS&feedName=bankingfinancial-SP&pageNumber=1&virtualBrandChannel=0) was hired by the New York FED recently? :clown:
MICHAEL J. ALIX
SENIOR MANAGING DIRECTOR
BEAR STEARNS & CO, INC.
THE NEW BASEL ACCORD:
PRIVATE SECTOR PERSPECTIVES
BEFORE THE
HOUSE FINANCIAL SERVICES COMMITTEE
SUBCOMMITTEE ON FINANCIAL INSTITUTIONS
AND CONSUMER CREDIT
JUNE 22, 2004
........
As investment banks began to comprehend the impact of Basel II across their global
businesses, it became clear that the commercial-bank oriented approach, as reflected in the
Accord’s third consultative paper, could be problematic.The composition of businesses typical
of a major investment bank varies considerably from those typical of a traditional commercial
bank – for example greater focus on short-term trading and secured financing, less (if any)
emphasis on hold-to-maturity lending – and the investment banks observed that the apparent
Basel II capital requirements (OA: more capital required) for some of their key businesses were out of line with perceived risk and actual loss experience. Outsized capital requirements could cause firms to reduce activity (and by extension liquidity) in certain securities markets, so it was critical that the
investment banks’ concerns be addressed.
On the USA's CSE framework:
Another key benefit is that firms that choose to register under CSE will have to demonstrate group-wide adherence to rigorous risk management practices. Reaffirming the old adage of “no pain, no gain,” firms starting the application process report that the exercise is arduous, but also say that the result is sure to be further enhancement of regulators’ confidence that there is a documented set of robust and resilient risk management practices and internal controls in place at these firms.
BTW: Guess who (http://uk.reuters.com/article/bankingfinancial-SP/idUKN0437333520081104?feedType=RSS&feedName=bankingfinancial-SP&pageNumber=1&virtualBrandChannel=0) was hired by the New York FED recently? :clown: