New Global Banking Rules
Global regulators have agreed on new banking rules aimed at avoiding another financial collapse. The new rules, which will gradually require banks to hold greater capital buffers to absorb potential losses, are likely to impose stricter discipline on credit cards, mortgages and other loans and reshape the credit industry. The requirements will be phased in over a period of years.
This will Require banks to keep more capital on hand will limit the amount of loans they can make, but it will make them better able to withstand the blow if many of those loans go sour. The rules also are intended to boost confidence that the banking system won’t repeat past mistakes.
U.S. officials including Federal Reserve chairman Ben Bernanke issued a joint statement Sunday calling the new standards a “significant step forward in reducing the incidence and severity of future financial crises.”