CP3 comments: Any last words?
The comments elicited by the Basel Committee's third consultative paper (CP3) show just how little consensus exists between regulators and banks on the Basel II capital Accord. Dwight Cass highlights some of the telling comments.
A criticism fielded by many banks and banking associations relates to Basel II’sinclusion of expected loss in the calculation of regulatory capital.
FleetBoston Financial’s comments reflect the industry’s concern:
Expected losses are a recurring cost of doing business that are incorporated into all transaction pricing, particularly for credit products. As such, losses are then charged against income, which by its very nature includes expected loss, as incurred or via a
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