Basel III and Risky Banking Behavior: Too Little, Too Lenient, Too Late?
Episode Description
KNOWLEDGE AT WHARTON ARCHIVES: As the world haltingly recovers from the recession, regulators are struggling to modify the financial system to prevent another crisis. The latest effort: stricter capital requirements to help prevent large banks from collapsing under the weight of unexpected losses. While the new proposals -- called Basel III -- are designed to reduce risk-taking by assuring that banks continue lending in a weak economy, Wharton Finance professors Richard Herring, Franklin Allen, and others are skeptical that the new proposals will accomplish this goal.
More on this interview: https://knowledge.wharton.upenn.edu/article/basel-iii-and-risky-banking-behavior-too-little-too-lenient-too-late/
#basel3 #banking #wallstreet #financialcrisis π Finance & Accounting
Brief Summary
Wharton Professor Richard Harring discusses Basel 3 Accords and their impact on bank capital requirements and liquidity regulations.
Key points
- Basel 3 Accords Discussion. Professor Richard Harring discusses the implications of the Basel 3 Accords on banking regulations.
- Shift to G20 Governance. The shift from G10 to G20 reflects a new world governance system for finance.
- Flaws in Basel 2. Exploring the serious mistakes made in Basel 2 regarding capital definitions.
- Basel 3 Requirements. The Basel 3 requirements aim to hold banks accountable for their liquidity management.
- Challenges of Implementation. Implementing Basel regulations is complicated by independent regulatory actions like the Dodd-Frank bill.
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Episode highlights
- Basel 3 Accords DiscussionProfessor Richard Harring discusses the implications of the Basel 3 Accords on banking regulations.βIt's a marked change, tidying up mistakes from Basel 2.β0:48Sep 29, 2010
- Shift to G20 GovernanceThe shift from G10 to G20 reflects a new world governance system for finance.βThe balance of economic power has shifted to Asia dramatically.β1:59Sep 29, 2010
- Flaws in Basel 2Exploring the serious mistakes made in Basel 2 regarding capital definitions.βThey ignored the numerator in the minimum capital standard.β4:05Sep 29, 2010
- Basel 3 RequirementsThe Basel 3 requirements aim to hold banks accountable for their liquidity management.βBanks need to be responsible for more of their own liquidity.β23:37Sep 29, 2010
- Challenges of ImplementationImplementing Basel regulations is complicated by independent regulatory actions like the Dodd-Frank bill.βIt's turning out to be very very hard to implement.β25:04Sep 29, 2010





