More Leverage For The Unleveraged—Basel Committee Proposes Specific Leverage Capital Framework For Banking Organizations

On June 26, the Basel Committee on Banking Supervision ("Basel Committee") published a Consultative Document that proposes specific leverage capital requirements, and related disclosure requirements (the "Proposal"), that would more fully implement the leverage capital provision of the 2010-2011 revised regulatory capital accord ("Basel III") adopted in the wake of the financial crisis. The Proposal specifies the elements of the "Exposure Measure" for calculating leverage capital requirements.1 Comments on the Proposal are due by September 20, 2013.

A Quick Refresher on Basel III Leverage Capital

Basel III provides for a new non-risk based leverage capital ratio that, when fully effective, will supplement the Basel III risk-based capital requirements. In general, the leverage ratio is intended to reinforce a banking organization's overall regulatory capital by creating a non-risk-based regulatory capital backstop. Implementation of the leverage ratio has begun with