Resources for Basel II Capital Accord (Basel II)

Kohn says Basel II implementation will help banks avoid excessive risk

www.koreatimes.co.kr

Federal Reserve Board Vice Chairman Donald Kohn said today that the full implementation of the Basel II agreement will help banks keep closer track of the lending risks they face, since it will make it harder for them to move loans off of their balance sheets.

At a Senate Banking Committee hearing today, Kohn said the ability of lenders to take loans off of their balance sheets 'clearly gave banks the sense that they didn't need to manage' risks associated with certain loans.

The fact that the Basel II agreement would make it harder for banks to do this, means that the agreement addresses some of the issues that have surfaced in the current mortgage and credit crisis. 'It's a huge step in the right direction,' Kohn said of the agreement.

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