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US lawmakers reiterate concerns about Basel II

WASHINGTON, June 9 (Global Risk Regulator) – US lawmakers yesterday reiterated their concerns about the controversial Basel II bank safety rules at Senate hearings on White House nominations for key banking supervision posts.

Members of the Senate’s banking committee urged again that the new capital adequacy rules for banks should not to result in reductions in the amounts of capital banks need to absorb shock losses, while worrying that the latest US proposals for implementing Basel II could make it harder for US banks to compete abroad.

The committee held the hearings on President George W Bush’s nominations to four regulatory posts, including that of Federal Reserve Board governor Donald Kohn to the vice chairmanship of the Fed, and of Sheila Bair to the chairmanship of the Federal Deposit Insurance Corporation (FDIC), the agency that insures customer deposits. Governor Kohn is a veteran of the US central banking system who was tapped by Bush for the job following the resignation of Roger Ferguson as Fed vice chairman.

Bair is currently professor of financial regulation policy at the University of Massachusetts-Amherst. She was previously Assistant Treasury Secretary for financial institutions. Bair would replace Donald Powell as FDIC chairman. He left the agency in November to co-ordinate efforts to rebuild the hurricane-hit US Gulf Coast areas.

The other two nominations are for James Lockhart as director of the Office of Federal Housing Enterprise Oversight and Kathleen Casey as a member of the Securities and Exchange Commission.

Banking committee members generally commended all four nominations.