巴塞尔结局的意外后果

to meet the goals of the Inflation ReductionAct, according to the American Council onRenewable Energy (Acore).However,the proposed rule wouldincrease by fourfold the capital required for acrucial source of funding for solar or windfarms, rendering them prohibitively expen-sive for many banks. Already, some banks arepausing, according to policy advisory groupCapstone. And passage of the proposal couldultimately shrink annual tax equity invest-ments by 80-90 per cent, according to Acore.The private credit market could pick upsome, or perhaps all, of the slack over time.But the unravelling of this source of financecould hinder the financing of many projectsthe IRA envisioned.Second, the Fed may need to step in as thelender of last resort more frequently. Thebiggest in proposed bank capital require-ments is for “market risk” — such as tradingbonds. How much capital a bank has to keepas a buffer depends on the amount of assets ithas adjusted for risk — the more risk, thehigher the buffer. The rules propose that forcapitalfor trading,the risk weightingincrease by a whopping 70 per cent. There isalreadyconsiderable concern about thewithdrawal of banks in market making — andthis is likely to make this issue worse. TheFed had to intervene to support the Treasurymarket in 2019 and 2020 and it may need apermanent support facility if these proposalswere to be introduced unamended.Third, the proposal could incentivise morecorporate lending to shit to private markets.Itis likely to penalise those within theregulated sector, relative to those providersjustoutside,incentivising financial flowstowards the unregulated — what ProfessorCharlesGoodhart calls the“boundaryproblem”.Finding the right balance andidentifying risks is inherently difficult. Butthe initial Fed proposal suggests the bounda-rycould shit significantly—a boon toprivate credit players, and perhaps interna-tional banks.For example, one proposal suggests loansfor small and midsized companies shouldhave a risk weighting of 100 per cent. But ifthe company is deemed investment gradewith a bond listed on an exchange, a morefavourable risk weighting of 65 per cent isproposed.Today,very few small andmidsized groups issue bonds. This wouldpenalise their cost of funding and encouragethem to seek finance outside of the bankingsystem. That is why European regulatorshave not gone down this road. Moreover, theBank Policy Institute suggested the actualloss experience warrants a risk weighting of38 per cent.Meanwhile, many of the issues which ledto Silicon Valley Bank’s failure — poor super-vision,interest rate risk and depositorconcentration — are let unaddressed in theseproposals. Absent the Basel endgame, theinvestment case for US banks has greatlyimproved with the Fed pivot to a more dovishstance on interest rates. But investors shouldwatch the unintended consequences of therule changes closely to help gauge how farregulators may recalibrate and alter creditflows.The author is vice-chair at Oliver Wyman and iswriting in a personal capacity