The Wizard of Oz in the world of global central banks has spoken and 3% is the new agreed upon ratio for fractional reserve banking. Banks have just over four years to get in line until they must start publishing their ratios in 2015 which could become binding (following certain adjustments) by 2018.
Most enlightening is the statement regarding the equal treatment of sovereign states in comparison with conventional non-bank business in regard to a number of lending practices. What does this mean for the municipal and state bond markets and the cost of funds for sovereigns? What about banks that are caught up in long-term commercial real estate deals that won’t be compliant within this timeframe? My guess is rising rates ahead and anyone stuck with bonds is in a heap of trouble. I’m sure TBTF banks are in the clear, but couldn’t these parameters spell doom for select regional banks.
Who are these guys:
“…the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.”
Professor Carroll Quigley – Georgetown University
Tragedy and Hope: A History of the World in Our Time (1966)
(special thanks to Gordon T. Long of LCMGroupe for this quote - http://lcmgroupe.home.comcast.net/~lcmgroupe/Tipping_Points.htm)
Here’s a link to the official press release: http://www.bis.org/press/p100726.htm
Here’s a link to the details of the agreement: http://www.bis.org/press/p100726/annex.pdf
Update: Richard Thomas of Bank of America provides this detailed explanation of the Basel III rewrite as reported by the most excellent website www.zerohedge.com: http://www.zerohedge.com/article/basel-iii-gutted-delayed-even-existing-regulatory-regime-too-burdensome-insolvent-banking-in