The battle between Europe and the US over the Basel II capital accord is coming to a head. After many previous delays, some degree of consensus was reached in Madrid last October and a long-awaited agreement on Basel II was expected to be reached by this June with implementation by the end of 2006. All seemed fine but then US politicians entered the picture.
While US regulators, including the Federal Reserve Board and the Office of the Comptroller of the Currency (OCC), had helped steer the US position on the Basel Accord over the previous five years, Michael Oxley, chairman of the US House of Representatives Committee on Financial Services was highly critical of their approach. In a letter last November, he complained that US regulators were moving too fast and making important public policy decisions outside of the political process.
