According to the FDIC, "maintenance of a strong base of capital at the largest, most systemically important institutions is particularly important because capital shortfalls at these institutions can contribute to systemic distress and can have material adverse economic effects." The agency said its research shows a 3% minimum supplementary leverage ratio would not have appreciably mitigated the growth in leverage among these organizations in the years preceding the recent crisis.

That is why regulators should have waited until the leverage ratio proposal is ready to be implemented before going ahead with Basel III, said Hoenig.

"I support more and better capital; however, the Basel III standard without a binding leverage constraint remains inadequate to the task of assuring the American public, who paid a high price for the financial crisis, that our capital standards are adequate to contribute to financial stability," he said in a statement. "A capital standard, to be useful, must be understandable and enforceable and must be sufficient to absorb unexpected loss. Unfortunately, the Basel III interim final rule, as proposed, fails to fully meet these criteria."

By relying on risk-weighted capital measures, Hoenig said Basel III's approach will correlate poorly with actual future losses. Basel III "continues to rely on risk-based measures, ignoring the usefulness of the leverage ratio to constrain excess risk taking for the largest, most complex institutions," he said.

Hoenig said U.S. regulators were needlessly rushing to implement Basel III, noting that all of the largest, most complex U.S. firms currently meet the 3% threshold.

"Nothing is accomplished by acting now and failing to wait an extra 60 or 90 days to receive comment and then implement a complete rule with a stronger leverage ratio," he said. "By separating the implementation of Basel III from the supplemental leverage ratio proposal, we gain little and risk a stronger leverage ratio being delayed, or worse, not being adopted."

Guggenheim Securities analyst Jaret Seiberg said that while banks might have some opportunity to moderate the proposal before it is finalized, the greater probability is that Democratic lawmakers on Capitol Hill and maybe even some bank regulators will try to make it even tougher.

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