FDIC chief: Regulators succumbing to banks on capital requirements

21 July 2010

Sheila Bair, chairman of the Federal Deposit Insurance Corporation (FDIC), has warned that "disingenuous" lobbyists from banks are persuading some of the members of the committee that is setting international capital standards to adopt a softer stance.

She said that most regulators deciding new rules at the Bank for International Settlements still want banks to hold significantly higher quality capital in larger amounts.

But Ms Bair told the Financial Times that regulators are not completely united in this view.

"There are a few that are perhaps succumbing somewhat to industry arguments that if we raise capital requirements, we're going to stifle the recovery and they're going to cut back on lending," she said.

The committee hopes to outline its final proposals in November's G20 meeting, which is to be held in Seoul.

Earlier this year, Ms Bair told Reuters that reform of the financial services sector should be based on fixing the banking system rather than worrying about punishing those drawing large salaries.

By Gary Cooper

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