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US Congress could still block Basel II, says lawmaker

WASHINGTON, November 10 (Global Risk Regulator) – A senior US lawmaker today warned that Congress could still stop the controversial international Basel II bank safety rules from being implemented in the US.

Senator Paul Sarbanes, senior Democratic Party member of the Senate’s banking committee, urged US supervisors to tell their foreign counterparts that Congress could still "nix" the new Basel rules.

Sarbanes, questioning the supervisors at hearings on Basel II held by the banking committee today, queried the necessity for Basel II in the US. He charged regulators with going ahead with the regime despite the problems that have been encountered with tests of the rules on US banks.

He described as "a ship passing in the night" an answer given to his questions by Federal Reserve Board governor Susan Schmidt Bies who, together with the heads of the other three federal bank supervisory agencies, essentially reiterated in their testimony the reasoning behind their recent joint decisions on the "bifurcated" US approach to Basel II.