U.S. banks are urging financial regulators to soften new international bank liquidity rules as the sector faces a collective deficit of $1,400 billion for complying with them, Financial Times reports. The Clearing House, the oldest banking group in the country, said the so-called Basel III reforms restrict a U.S. lender to holding only specific cash-like assets to tide over a month in case of a run on the bank.
Lenders in the U.S. and Europe are claiming that the liquidity coverage ratio is too rigid and would limit lending. The Clearing House has in a letter to Treasury Secretary Timothy Geithner sought relaxation of the standards as they unfavorably treat debt and securities issued by U.S.-controlled mortgage entities Fannie Mae and Freddie Mac. The liquidity rule will not come into effect until 2015.
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