WASHINGTON (TheStreet) -- You'll have to forgive the banking industry for not quite knowing how much capital it's supposed to have.
Before the fall of 2008, policies of the industry's three regulators -- the Federal Deposit Insurance Corp., the Federal Reserve and the Treasury -- were consistent in being collectively lenient and individually disparate. Now they're consistent only in being vague, even if the same rules remain on the books.
Though new standards won't be unveiled until the the Basel Committee on Banking Supervision comes to an agreement, a proposal by Sen. Susan Collins (R., Maine) would strengthen the implementation of those rules and thwart possible loopholes.
Oddly enough, Collins is meeting backlash not just from the industry but from two regulatory agencies. I'll get to how their ideas differ, why it matters and what may come of the reform, but first let me explain the Gordian knot of bank regulation and how the three entities are involved.
|Sen. Susan Collins (left) has proposed strict new regulations on capital as part of the financial reform bill, and she's got the backing of FDIC Chairwoman Sheila Bair (right).|
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