Banks are lobbying against international plans to tighten rules on securitization claiming they will tie up capital and starve the economy of credit, Bloomberg News reported today. Credit Suisse Group AG, BNP Paribas SA and Deutsche Bank AG are among lenders that have written to the Basel Committee on Banking Supervision in Switzerland to voice concern about reforms to be implemented from 2014. Regulators are overhauling the rules after the widespread use of the technique in the U.S. mortgage market contributed to the financial crisis by spreading risk from lenders to the "shadow banking" sector. The firms say that the plans, which will force banks to hold more capital against any tranche they keep, would make transactions prohibitively expensive. In recent months, banks have begun to look again at securitizations as a way of meeting the higher capital targets—without cutting lending or raising fresh equity. The committee at the Bank for International Settlements in Basel will carry out an impact study of the securitization proposals in the coming weeks, said Bill Coen, the group’s deputy secretary general. The plans are likely to be on the agenda for the June meeting, he said.
