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SPEECH | DECEMBER 12, 2023 |
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Jonathan McKernan, Director, FDIC Board of Directors, at ISDA’s Conference on Trading Book Capital: Basel III Implementation
Thank you for this opportunity to speak with you all today.
In my July dissent and in an October speech, I made the case that our Endgame proposal amounts to a big leap of faith in the Basel Committee. In developing the Endgame reforms, the Basel Committee made some key design decisions with little or no explanation. This lack of rationale has left the U.S. banking regulators unable to defend or even understand important aspects of the Endgame reforms that we now propose to implement. The lack of rationale has raised doubt about the merits of key aspects of the Endgame reforms. The lack of rationale has hindered the public’s ability to comment on our proposal. Finally, the lack of rationale has raised doubt that we can achieve legitimacy and consensus in the eventual final rule.
Today, I’ll pose the question whether the U.S. banking regulators could get a better outcome—one that earns legitimacy and consensus—by adopting a phased approach that punts on the underdeveloped aspects of the Endgame reforms pending further data collection, analysis, and debate, while proceeding with implementation of the less-contested aspects.
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