The Federalist Society

Basel II Implementation: Rushing to a False Start

March 4, 2006

Charles M. Miller

Historically, one method of regulating banking and other depository institutions has been to mandate certain levels of capital they are to maintain. Capital is generally a measure of an organization’s net worth, its assets minus its liabilities and is a measure of a bank’s ability to absorb losses, protecting senior lenders, including depositors and the insurer of those deposits. By mandating higher levels of capital, regulators theoretically increase the size of the cushion available to absorb losses before a bank fails....

Basel II Implementation: Rushing to a False Start  


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