The Basel Committee's peer review program under which foreign regulators will visit U.S. banks to ensure they're adopting Basel standards is a critically flawed idea, ABA senior counsel Hugh Carney said in a BankThink op-ed in the American Banker newspaper.
"I find it extremely troubling that foreign regulators will be in U.S. banks on U.S. soil to ensure they are complying with foreign standards, just because U.S. regulators felt it was OK," Carney wrote.
He noted that technically U.S. banks can opt out of the foreign-examiner visits. "However, when U.S. regulators have endorsed the program and even chair the Basel group running the program, few banks will view participation as voluntary," Carney said.
He emphasized that the Basel agreement is not a treaty, was never ratified by the Senate, or subjected to legislative review and sanction. "The initiative to extend authority to examine U.S. banks to a team of foreign inspectors is not one that can be comfortably taken without congressional action," Carney said.
Read the op-ed.