“Over the weekend, global regulators agreed to substantially ease the new Basel III regulations and delay their full implementation by four years. The global liquidity standards were designed to ensure banks had sufficient capital on hand to survive another Lehman-like crisis, as well as require that capital be high-quality and liquid. There was a lot of fanfare from regulators when the regulations were first announced in 2010 — and a lot of gnashing of teeth from investors about how they would “cripple” the industry and potentially hurt economic growth.
After coming under pressure from the banking industry, global regulators agreed to loosen the definition of “high-quality liquid assets” to include highly rated residential mortgage-backed securities. “Ultimately, the negotiators agreed to let banks use less-traditional assets to satisfy up to 15% of their capital.”
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