Basel II capital requirements are "not a contributing factor to subprime crisis"

NEW YORK - A leading US academic has hit back at claims Basel II has been a major contributory factor in the subprime crisis and has come out in staunch defence of the role it has played in limiting the severity of losses seen among investment banks.

William Chambers, associate professor of finance at Boston University was reacting to recent claims in the US press that Basel's capital requirements have encouraged banks to securitise mortgage portfolios and move them off-balance-sheet to avoid having to hold regulatory capital against them.

"That assessment is purely and simply misguided; if anything the opposite is the case. Basel has not encouraged more securitisation but rather discouraged it. Under Basel I once securitisation is complete a