You're watching...
FBN's Adam Shapiro breaks down Basel III requirements and how it may make it harder to borrow from banks.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
It's a series regulation nation and we start with international banking regulations have in the likes of JPMorgan's Jamie Dimon calling them anti American out of Shapiro.
Now what this is got the good the bad and the ugly of these new regulations -- And it's a Basil three you have regulations -- talking about international banking and we are expecting the regulators here in the United States depending on which bankers you talk to.
To put forth how they intend to implement Basel III sometime at the end of this year -- early next year the bottom line for you -- me as a regular Americans.
It's going to be a whole lot harder to borrow money from banks after these.
New requirements are put into place and here's why first let's give you the numbers then let's put it in English under Basel III the requirements for tier one capital this is what the banks have to have on hand.
Against the risk weighted assets are gonna rise to four point 5% common equity.
2.5 percent conservation buffer this is just that kind of -- aspect bringing it to 7%.
And then the biggest banks worldwide.
Are going to have to have anywhere from an additional zero to 2.5 percent as a counter cyclical buffers in English.
Banks like JPMorgan Chase Wells Fargo Citi Bank of America.
Goldman Sachs Morgan Stanley that would have to have roughly nine point 5% of their money just tied up sitting doing nothing.
As a hedge against calamity so what JPMorgan was saying what Jamie Dimon said in an interview with the Financial Times as want.
It's anti Americanism is drive business over to the Asian banks which are not going to adhere to these.
These Basel III of -- quite the same way He said quote they're plenty of countries out there that are happy with the changes being implemented in the United States.
They realize that they can be huge beneficiaries of this -- finally we got a comment from you Carney senior counsel the American Bankers Association.
The effectively are going to need to cut back lending or raise new capital by going to market to the marketplace the bottom line you and me.
Everyone seems to -- the banking world Basel III as a -- that's gonna drive lending.
And see it yet He makes a great points He makes a great point about -- -- and also what it means for banks here and it may be bad news for banks here.
Well we aren't just this is just a little milestone today Goldman Sachs shares went under a hundred dollars and share during the during the session so that's kind of you know.
Reflection of the insurgency in the financial markets.
You know it's kind of like -- well we have a financial crisis as we didn't have enough regulations and now maybe were overreacting with too many regulations so.
That's it always seems to happen a lot of the times they just have over reactions too many regulations but you know eight it could lead Asian banks would that would that we that we they with them again.
Market -- to corrected to.
Bank of America which has the least amount off -- right now has 11% not nine point five yeah.
Nasty what they -- the buffers are in place and by the way.
This is written I mean in other words we -- the US has already had -- capital requirements even after the S and L crisis.
And even after the S and L crisis we have systemic rules put in place because of that crisis it's not a lack of rules with the lack of enforcement of those rules.
I mean it's a really shortage of enforcement is the problem puts -- point this is an anti it sounds so what Ginnie -- -- it not really anti American but anti western banks right.
Yeah I called death of a and I asked for comment on its -- absolutely the Asian banks the Japanese banks the Chinese banks.
This is that -- these -- the countries and the banks that are gonna benefit especially the Japanese one of the criteria to determine if you have to pay this extra kind of money to off to the side.
Is if you're part of a complex system of the Japanese government -- Our banks are designed for those local market therefore they're not complex therefore Basel III multiply quite.
And there are a lot of good cent increments I guess some earnings outlook -- at the front spectral gravest innocent in a lot of your big European names and it the big the Big Three French banks that could be.
Downgraded -- -- their exposure just to Greece 57.
Billion.
That's seven billion is that that's private and public.
Exposure and that's take them down and you're depending on -- them.
That's seven do with how the banks have operated president do with regulations are whether or not they have capital.
Set aside it's it's a government that's taking equivalent.
Is different and that's what they're missing.
I've read in the case of those banks though they they actually were.
Prodded by their governments to purchase those Greek bonds I mean that's a whole different story right -- record did so why they're in trouble now but.
This led Basel III essentially what -- of a pointed out to me was that.
This is an accord between the US banks and not even the banks for the government of the United States and the western -- -- The Asian world could care less about Basel for a.
We believe we build and we've got -- US banks in 2000 in a but have we swung the other way.
That's -- that's your point -- that I think that's an excellent way.
US banks -- are more highly capitalized now than they have ever been since we started looking at -- activity for it but again it was -- -- -- we would -- earlier is that if you don't know this is coming you know they approve these regulations a few months ago Jamie -- is this kind of like you know grandstanding a little bit but you know.
To think about it regulations can be change this I think that it isn't going to be the what it debate that's gonna happen -- orbit and Robinson I mean what -- line -- At -- thank you very much.
