WASHINGTON Acting
Comptroller of the Currency Julie L. Williams said today in a speech before the
Institute of International Bankers that the greatest challenges in the Basel
process lie ahead. After so many years of debating the theoretical side of
regulatory capital and dealing with the complex Basel formulations, we are at
the point where we must come to grips with how Basel II will work with the
realities and practicalities of bank supervision.
Over the next 15
months, she said, regulators must confront a daunting list of challenges, from
analyzing data from the fourth Quantitative Impact Survey (QIS 4) to issuing
proposed rules, supervisory guidance and a final rule.
I know of only one way for supervisors to accomplish these
aggressive objectives, she said. Given the unusual sequence of the rulemaking
and implementation processes, we must undertake these efforts with an
unprecedented level of transparency, engaging in an open dialogue with the
banking industry and with all interested persons, on all aspects of the
proposal, to ensure that interested parties are aware of our current plans for
implementation as early as possible.
Ms. Williams stressed that the integrity of the rulemaking
process pertaining to the Basel II Capital Accord demands that all interested
parties be given a fair chance to be heard and to influence the outcome, even
if that results in changes to the proposed framework.
We are quite aware
that some thoughtful and knowledgeable bankers and policymakers have expressed
misgivings about Basel IIs models-based approach and its complexity, and about
particular components of the Basel II approach, she said.
If we dont have good
answers to good issues that are raised in the rulemaking process, appropriate
revisions to the proposal must be made, she added.
Ms. Williams said it
also is possible that Congress could become involved in the process, noting
that Basel-related legislation was introduced just last week in the U.S. House
of Representatives.
Ms. Williams noted that
the most pressing and immediate regulatory deadline is the Notice of Proposed
Rulemaking that has been targeted for issuance by the middle of this year. Once
comments have been fully considered, the agencies expect to publish the final
Basel II rules and supervisory guidance by mid-2006.
But again, let me
stress, that we are indeed we must be committed to the integrity of the
U.S. rulemaking process, she said. There is no done deal here; much could
change based on information developed in QIS 4 and the public comment process.
Ms. Williams encouraged
the banking industry, Congress, and other interested parties to be fully
engaged in the dialogue with regulators, and to respond each time the agencies
solicit comment. She said that institutions contemplating adoption of Basel
II-based regulations should discuss their plans with their primary supervisor
early in the planning process.
Supervisors,
institutions, and the public share a common goal in the implementation of Basel
IIthe development of a prudentially sound, risk-sensitive, risk management,
regulatory, and supervisory regime that does not introduce unacceptable
regulatory burdens or externalities, the acting Comptroller said. We need to work together in this
effort.
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The Office of the
Comptroller of the Currency was created by Congress to charter national banks,
to oversee a nationwide system of banking institutions, and to assure that
national banks are safe and sound, competitive and profitable, and capable of
serving in the best possible manner the banking needs of their customers.