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Banks Tell Basel to Back Off Credit-Risk Capital Restriction

  • Institute of International Finance responds to Basel proposal
  • IIF says Basel credit proposal could have ‘material’ impact
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Banks are stepping up opposition to looming capital standards, with one of the financial industry’s largest lobbying groups warning that regulators risk slowing the global economy with a clampdown on lenders’ ability to judge the health of their own borrowers.

The Basel Committee on Banking Supervision’s proposed curbs on banks’ use of internal models to assess risks would have a “material impact” on lending to financial institutions, corporations and other borrowers, the Institute of International Finance wrote in an 83-page letter to the regulator. The IIF called on the Basel Committee, whose members include the U.S. Federal Reserve and the European Central Bank, to grant banks more leeway in assessing the riskiness of borrowers, particularly large corporations.