Geithner praises new global capital standards

WASHINGTON - U.S. Treasury Secretary Timothy Geithner said Wednesday that U.S. banks can meet new higher capital rules through future profits without crimping lending and harming economic recovery.

Echoing recent comments from other top international financial regulators, Geithner said the new Basel III capital rules would not be a crushing burden on banks.

"It is important to note that because we moved so quickly with the bank stress tests in early 2009 that forced banks to raise more common equity, the U.S. financial system is in a very strong position internationally to adapt to the new global rules," Geithner told the House Financial Services Committee.

Earlier this month, regulators from the 27 Basel Committee countries, including the United States, agreed to make banks hold more and higher-quality capital so they can better withstand economic downturns and financial shocks.

The committee provides a forum for regular cooperation on international banking supervisory matters.

Under the proposal, the new rules would be phased in gradually and would not go into full effect until 2019. It will be left to each country to implement it.

Alabama Rep. Spencer Bachus, the panel's top Republican, criticized the capital accord for putting a heavy burden on banks.

"Higher capital standards means less credit, less credit means fewer jobs and less economic growth," the lawmaker said. "We need to make sure the standards we adopt really do make the financial system more resilient without needlessly sacrificing more jobs."- Reuters