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BRIEFLY

August 04, 1988

The Federal Reserve Board approved guidelines to implement a global accord aimed at strengthening the world banking system by requiring banks to set aside more capital against risky assets. The Basel Accord, signed last month by 12 countries, will force banks by the end of 1992 to hold capital equal to 8% of their assets. The Fed vote was 5 to 1, with Governor Martha Seger dissenting. One important rule approved by the Fed would allow the bank holding companies that it regulates to count billions of dollars in some types of preferred stock as part of the first level of capital reserves mandated by the Basel Accord.

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