[15] Due to the COVID-19 pandemic, from April 2020 until 31 March 2021, for financial institutions with more than $250 billion in consolidated assets, the calculation excluded U.S. Treasury securities and deposits at Federal Reserve Banks.
This higher minimum reflects the PRA's differing treatment of the leverage ratio, which excludes central bank reserves in 'Total exposure' of the calculation.
[23] In 2014, the Federal Reserve Board of Governors approved a U.S. version of the liquidity coverage ratio,[21] which had more stringent definitions of HQLA and total net cash outflows.
Banks are required to calculate their exposures based on "economic value of equity" (EVE) under a set of prescribed interest rate shock scenarios.
[41] Implementation of the Basel III: Finalising post-crisis reforms, the market risk framework, and the revised Pillar 3 disclosure requirements were extended several times, and is now scheduled to go into effect on July 1, 2025 with a three-year phase-in period.
[45][46][47] An OECD study, released on 17 February 2011, projected that all else equal, the medium-term impact of Basel III implementation on economic growth would be in the range of −0.05% to −0.15% per year due to increased bank lending spreads of 15 to as much as 50 basis points.
[52] Basel III does not go far enough in reducing reliance on external credit rating agencies, notably Moody's Investors Service and Standard & Poor's, thus using public policy to strengthen anti-competitive duopolistic practices.
[53] Academics criticized Basel III for continuing to allow large banks to calculate credit risk using internal models and for setting overall minimum capital requirements too low.
As Basel III does not absolutely require extreme scenarios that management flatly rejects to be included in stress testing this remains a vulnerability.
The Heritage Foundation argued that capitalization regulation is inherently fruitless due to these and similar problems and—despite an opposite ideological view of regulation—agree that "too big to fail" persists.
[56] Basel III was also criticized as negatively affecting the stability of the financial system by increasing incentives of banks to game the regulatory framework.
[57] Notwithstanding the enhancement introduced by the Basel III standard, it argued that "markets often fail to discipline large banks to hold prudent capital levels and make sound investment decisions".
[57] In comments published in October 2012, the American Bankers Association, community banks organized in the Independent Community Bankers of America, and Democratic Party Senators Ben Cardin and Barbara Mikulski and Representatives Chris Van Hollen and Elijah Cummings of Maryland, said that the Basel III proposals would hurt small banks by increasing their capital holdings dramatically on mortgage and small business loans.