BETTER MARKETS STATEMENT ON BASEL COMMITTEE DECISION

Better Markets President and CEO Dennis Kelleher made the following comment today after the decision by the Basel Committee to impose additional surcharges on large banks:

The new Basel capital standards are better than they were before, but they simply aren’t enough.

It must be remembered that the debate about capital is really a debate about how much the gigantic, global banks can finance their activities with debt or equity. The banks want to use as much debt as possible because it increases their profits and compensation. The public interest is to have them finance themselves with less debt and more equity capital, which greatly reduces the likelihood they would need to be bailed out in the future.

The real question is whether or not massive, mega banks are going to be permitted to operate in a way that protects their profits or protests our financial system, our economy and our taxpayers. That is the choice. With so many still suffering from the last Wall Street meltdown, this should not be a difficult choice.

Regulators must insist on less debt financing and more equity capital now.