Draft of the Brown-Vitter bill,

Basel

The largest U.S. banks… would have to hold capital in excess of Basel III standards under a proposal being drafted by Senate Democrats and Republicans to curb the size of too-big-to-fail banks.
The current draft of the legislation would require U.S. regulators to replace Basel III requirements with a higher capital standard: 10 percent for all banks and an additional surcharge of 5 percent for institutions with more than $400 billion in assets. Senators Sherrod Brown, a Democrat from Ohio, and David Vitter, a Republican from Louisiana, have said they intend to introduce the bill this month.

I doubt that they can get this through Congress in this form, but you have to applaud the attempt. Update. The full text of the bill is here .

  • It’s even more interesting than the Bloomberg story indicates. The highlights are:
  • 10% simple leverage ratio limit;
  • ‘Continuously increasing’ capital requirements above $400B of total assets (although it doesn’t say how);
  • Total assets include gross derivatives unless daily VM is exchanged;
  • A ban on Basel III implementation in the US;
  • Prohibitions on affiliate transactions and an anti-avoidance clause.

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