JACK EWING and SEWELL CHAN
The New York Times
September 12, 2010
|Proposed regulations come two years after the collapse of Lehman Brothers set off a worldwide banking crisis that required billions in government bailouts. Photo: James Chen.|
BASEL, Switzerland — The world’s top bank regulators agreed Sunday on far-reaching new rules intended to make the global banking industry safer and protect international economies from future financial disasters.
The new requirements will more than triple the amount of capital that banks must hold in reserve, an effort to move banks toward more conservative positions and force them to maintain a larger cushion against potential losses. They come two years after the collapse of Lehman Brothers set off a worldwide banking crisis that required billions in government bailouts.
Banks have warned that the new regulations could reduce profits, strain weaker institutions and raise the cost of borrowing for businesses and consumers. But regulators provided a lengthy transition period to give the banks time to adjust.
The centerpiece of the agreement is a measure that requires banks to raise the amount of common equity they hold — considered the least risky form of capital — to 7 percent of assets from 2 percent.