Basel II would mean banks less able to deal with NY attacks, US Senate told

WASHINGTON - The operational risk capital charge proposed by global banking regulators would create a "perverse incentive" against banks taking measures to cope with operational hazards such as the September 11 attacks in New York, the US Senate’s banking committee was told in mid-October.

Karen Shaw Petrou, managing partner of Washington-based banking and financial consultancy Federal Financial Analytics, told the committee the plan would impose a specific charge against op risk without any discount for banks that invested extensively in disaster recovery.

She urged the US Congress to take "a close, hard look" at pending changes embodied in the proposed Basel II bank capital accord.

She said it might be assumed that bank regulators would try to create as many incentives as