The new Basel Endgame draft still has problems, Hill, the US FDIC vice chairman, told Reuters

WASHINGTON (Reuters) – The new draft “Basel Endgame” bank capital increases still have problems, particularly in how the rule would assess banks’ market risks, Federal Deposit Insurance Corporation Vice Chairman Travis Hill said on Monday , at an event in Washington.

The FDIC, Federal Reserve and Office of the Comptroller of the Currency worked together to redraft the rules after intense industry pushback, but divisions among some key officials delayed a move to formally reissue the new draft for public feedback. Reuters and other media outlets reported earlier this month.

Those reports, said Hill, who holds one of the five votes on the FDIC board, raised concerns about the process and substance of the Basel re-proposal, citing a person familiar with the matter.

Hill appeared to confirm those reports on Monday, noting that while the new draft had significant improvements, including more closely tailoring banks’ capital requirements to their riskiness, the draft “still has problems.”

In particular, he said it overcapitalizes the risks posed by market fluctuations to the point of making banks’ trading activities “uneconomic.”

He added that he did not know when the regulator would vote on re-proposing the rule.