Basel Corporate Governance and How It Will Affect Banks in the United States

In: Business and Management

Submitted By beachbrat65
Words 2223
Pages 9
There has been no shortage of news regarding banking scandals and crises over the past three decades both globally and in the United States. This increased awareness has led to the focus upon legislation to stem this trend in addition to creating guidelines for how financial reporting should regulated in order to stabilize the banking industry. Part of this effort has been led by the Basel Committee in its creation of its Core Principles for Effective Banking Supervision consultative document that was released in December 2011. The committee consisting bankers and regulators from its 27 member countries provides a framework for establishing bank governance. The United States, even though a member of the Basel Committee, had previously resisted implementing this framework, instead favoring its own legislation. However, the Federal Reserve agreed to adopt the Basel rules as means of governing the nation's banks against the objections of large financial institutions who argued that these guidelines are too strict. As of May 2012, the proposal of this agreement has not yet been released by the Federal Reserve. It is hoped that the endorsement from the United States of the new requirements under Basel III will work to encourage the European Union to follow suit.
Banking Supervision Unlike many of the other countries that follow the Basel framework and have only one bank regulator, the United States banking system is governed by the Federal Reserve. The Federal Reserve consists of several different entities that include the Federal Reserve Board, the Office of the Comptroller of the Currency (OCC), the Office of Thrift Supervision or any one of 50 state regulatory bodies. Within the actual Federal Reserve Board, there are an additional 12 districts with 12 different regulatory staffing groups" (Deng, 2009, p. 5). The United States banking system is one of the most…...

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