The Basel Committee on Banking Supervision

I suspect that you, like me, know diddly-squat about the Basel Committee.  As the Bank of International Settlements puts it:

The Basel Committee on Banking Supervision provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. It seeks to do so by exchanging information on national supervisory issues, approaches and techniques, with a view to promoting common understanding. At times, the Committee uses this common understanding to develop guidelines and supervisory standards in areas where they are considered desirable. In this regard, the Committee is best known for its international standards on capital adequacy; the Core Principles for Effective Banking Supervision; and the Concordat on cross-border banking supervision.

The Committee’s members come from Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong SAR, India, Indonesia, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The present Chairman of the Committee is Mr Nout Wellink, President of the Netherlands Bank.

OK, that’s clear then!

Pers Kurowski

Well, according to a good supporter of and Guest contributor to Learning from Dogs, Pers Kurowski, we really ought to know much, much more about this ‘committee’.

Pers has a Blog called Tea with FT (as in the Financial Times) and there is much to read there that helps us understand why we are in so big a mess with the banks.  Here’s his piece from the 4th May.

Basel Committee, why don´t you just shut up!

Sir who do these Basel Committee regulators really think they are bullying us around with an arrogant “the banks should be sensible and realise that it might backfire if they protest too much”? as reported by Brooke Masters, May 4.

They themselves are the ones who thought everything would be fine and dandy if they just had some few credit rating agencies determine default risks and then gave the banks great incentives, by means of different capital requirements, to follow those credit risk opinions. They themselves are the ones who believing in the abundance of safe triple-A rated lending and investments, caused the world to stampede and fall over the subprime mortgages. They themselves should shut up, because rarely has the world seen such a gullible naive and outright stupid bunch of regulators.

Now the banks, in the midst of a crisis, need to build up the equity they do not have precisely because the Basel Committee did not require them to have; precisely when we need the most the banks to lend. The regulators, instead of bullying banks, should busy themselves day and night finding ways for severely capital stretched banks to be able to lend to those small businesses and entrepreneurs who have had to pay the cost of higher capital requirements but who had absolutely nothing to do in generating this crisis.

And just in case, for the record, I am no banker, only a citizen, very upset with the fact that in the 347 pages of the regulations known as Basel II, there is not one single word that describes the purpose of those regulations. Basel Committee why do you not start defining a purpose for what you are doing? Is that too much to ask?

By Paul Handover

3 thoughts on “Basel

  1. I’m new to Learning with Dogs but this is one of the most refreshing things I’ve read on the financial system in recent months – thanks for posting. Who’d have thought that my love of dogs would lead me to such like minds?! It never ceases to amaze me how my little dog leads me to learn…


  2. Good relationships with dogs are about love. But the BIS, the central bank of central banks, was initially about loving the people who instituted Nazism.

    I am not joking, although it would seem so to the commons. The BIS made possible the settlement of Nazism: Bank of International Settlement, that’s what it means, or how Wall Street, through the likes of Dr. Hjalmar Horace Greeley Schacht, settled the question of Germany as an extension of Wall Street, in the 1920s. A first Wall Street beauty was the constitution of the giant chemical monopoly, IG Farben, famous for providing the gas which killed millions.

    I know Per reproached me when I mentioned this the first time, but I do not doubt he has studied the life of Schacht meanwhile…

    In any case, the root of the entire evil is the publicly financed, privately gamed fractional reserve banking system. Early USA presidents knew this, but nobody of repute has dug into it, not even Marx. Your servant here would like to change this.


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