BASEL III IS A VERY COMPLICATED SET OF RULES


ANCHOR QUESTION OFF-CAMERA (ENGLISH) SAYING:
You've been very critical of Basel III rules. Fed governor Daniel Tarullo was also critical last month, he doesn't think Basel III is strong enough. Do you agree with him for the same reasons?
PAUL KUPIEC, RESIDENT SCHOLAR, AMERICAN ENTERPRISE INSTITUTE (ENGLISH) SAYING:
Basel III is a very complicated set of rules and they've been underway since the crisis and they're very very complicated and rely a lot on bank modeling which is a difficult thing to judge the accuracy of. So I agree with governor Tarullo in many ways that the Basel III risk-weighted system for banks is flawed in a number of ways. It's very difficult to verify.
ANCHOR QUESTION OFF-CAMERA (ENGLISH) SAYING:
You have been very critical of the overly complex nature as you see it of the Basel III rules. But won't larger capital requirement help prevent the kinds of systemic risk that we saw in the run up to the financial crisis?
PAUL KUPIEC, RESIDENT SCHOLAR, AMERICAN ENTERPRISE INSTITUTE (ENGLISH) SAYING:
There's a couple of things I think to keep in mind here. Basel III is a new system of capital requirements that tries to replace some of the holes that they found in the earlier capital requirements and its added complexity. And at the same time, Basel III also raises the level of capital. So the higher capital requirements are welcome. The added complexity though generates issues.

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