Will Tier 1 capital still be used in five years? Another call for the leverage ratio.

We’ve noted on these pages the many calls to reduce the complexity of Basel III. By “reduce complexity” we really mean “get rid of.” Andrew Haldane of the Bank of England has the best arguments we have seen so far. Last week FDIC Vice Chairman Thomas Hoenig added his two cents. The upshot here is a greater focus on the leverage ratio as the most honest look at bank risk. Take a look at the data below.

This table comes from Mr. Hoenig’s speech on April 9 to the International Association of Deposit Insurers in Basel, Switzerland (good place for it). We note with interest that Mr. Hoenig’s is going down a similar road as SNL Financial that we covered on January 9, 2013, but the data below are much more current.

FDIC Bank Capital

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