But each jurisdiction is responsible for applying the requirements in practice and critics worry that rather than paying heed to the watchdogs, Brussels politicians are too fond of what the banks are saying.
The position of the European Parliament is “deviating too far from the Basel agreement,” Ville Niinistö, a Finnish Green MEP, told POLITICO. The latest compromise is “not as ambitious as we had hoped.”
The Parliament is the latest part of the EU legislative machine to back a softer approach. The argument against the global deal is that higher capital charges could crimp bank lending to the economy.
MEPs are close to a deal that would allow banks to keep applying lower capital charges for low-risk mortgages and corporates without a credit rating for a transitional period.
That’s a substantial departure from the opening gambit of Jonás Fernández, the Spanish MEP leading work on the reforms — who last year pledged to take a tougher line and move toward a faithful application of the international accord.
But reality bites. “The Parliament is a democratic house, and we need to find a majority,” the Socialist & Democrat (S&D) lawmaker told POLITICO. But by keeping the carveouts temporary, the EU could be Basel-compliant in the “medium-term,” he said.
