Federal Deposit Insurance Corporation Vice Chairman Thomas M. Hoenig spoke at the 22nd Annual Risk USA Conference in New York, N.Y., on Nov. 9, 2016. The subject of his prepared remarks was "Strengthening Global Capital: An Opportunity Not To Be Lost." Hoenig discussed key factors at the core of the debate over what defines adequate capital.
Specifically, he discussed the controversy over alternative measurements for judging adequate capital; changes he said the Basel Committee appears to be considering that he believes will weaken current standards and why he thinks these changes are ill-advised; and his concerns regarding Total Loss-Absorbing Capacity and its use as a means to justify lower levels of capital and require firms to issue more debt.
According to Hoenig, "Momentum is developing within the Basel Committee to undermine measures that could increase bank capital levels, and some jurisdictions are threatening to walk away if the measures are thought too strict." He said the United States "should avoid joining this race to the bottom."