“Basel III – Another Disaster Waiting to Happen – AGAIN”

“Basel III – Another Disaster Waiting to Happen – AGAIN”

© 2015 Research Solutions, Inc. (all rights reserved)

Isn’t it amazing that the regulatory bodies and the power-that-be that establish the next generation of compliance “recommendations” don’t seem to understand that the rest of the world is recoiling from what Basel II did, let alone compliance and regulatory reconciliation procedures and methodology that has utterly failed?

The prime European banks have found loopholes in every aspect of separation of validated assets and being able to move them around to “meet” auditing compliance by using the ancient, but most effective, shell game system.

The proposed Basel III protocols and methodologies have holes in it that would make Swiss cheese envious.

Take the issue of not addressing “Virtual Currency” Transactions.

Then add into the missing equation that “Foreign Clearing Houses” working with “any” bank or financial institution has not been addressed or taken into account.

Why are either of these two examples of any importance?

Virtual Currency represents over 400 BILLION ($400,000,000,000) USD Dollars of non-reconciled, missing or otherwise unaccounted monies each year, and that figure is growing at an alarming rate.

Moreover, there has not even been an agreed upon definition of what Virtual Currency Transactions (VCT) truly are. If there is not even the basis of an agreed foundation, how in the world can there be any legitimate interpretation in the proposed regulations and laws that will govern it?

The issue of Clearing Houses is a matter we have addressed on numerous occasions.

However, it keeps returning to the same “broken record” statement that Clearing Houses are not governed or regulated as financial or banking institutions are.

Moreover, Clearing Houses managing “liquid” assets are reported as such, as well as their “accounts receivable” as though it is “liquid cash” when in fact is it far from it.

The purpose of Basel III, or any of the constantly evolving regulatory regulations addressing a method of clearly defining assets, both liquid and otherwise, let alone better methods of validating reporting methods and reconciliations of financial institutions, investments and such has been lost in “pure techno-babble and techno-writing”.

As with OSHA, which I believe has a definite value in our society, it went out of control when it issued a “manual” on how to use a two (2) step stool that was over 400 pages in length. This is one for the record that is well-remembered and created the up-roar that ended in the overhauling of OSHA as we know it.

We are still trying to figure out how you could write a ONE (1) page manual on using a 2-step stool without wasting a whole page, but not to digress…

As with OSHA, the Basel methodology and structure has become bloated, losing focus of the cause and effect on banks and financial institutions that can barely understand, comprehend and comply with Basel II due to the number of ambiguities and contradictory language and the lack of even understanding what ripple effect it is having on the industry it is trying to protect.

There is no question the regulations are required to properly reflect true and accurate financial reporting and investment representations; however it appears that those who have “designed” the next generation of compliance recommendations have missed the target completely.

1st, they have not even performed the necessary and, in our opinion, “mandatory” examination on HOW financial institutions and investment companies truly operate;

2nd, they do not comprehend the ripple effect of proposed regulation reforms in relation to the work and paper production just to perform basic compliance validation, which is strangling both the financial institutions AND those consumers who contemplate using or investing into such institutions;

3rd, those who are writing the new/updated reforms in regulatory compliance don’t understand the most basic concepts and working mechanisms of AML practices and HOW both Fraud and Threats work around the exact proposed regulations that are being written.

A simple fact about “Clearing Houses” that has also been over-looked:

They represent a “hole” in the system of over $900 BILLION USD Dollars annually throughout the world, and the accountability is ZERO when it comes to international controls that are both “agreed” upon and “practiced”.

Basel III will be another burden, created by those who don’t understand the industry, the financial burdens and repercussions and agony it will result it, both to the institutions AND the consumers/investors.

More “useless” paperwork;

More “Clogged” Court systems with a plethora of lawsuits;

More lost monies that will never be accounted for;

More descent between the United States and Foreign financial markets and investment institutions, which in turn, will polarize the regulatory bodies of each country involved; and

The frauds, abuses and threats will have more freedom than ever imagined.

This is a frightening, but very real perspective.

We have seen it with each generation of Basel methodology.

It has failed.

It has continued to fail.

It will fail with the next generation proposed to be “recommended” for implementation.

It is TIME to reassess the 400-page financial 2-step stool, as with what happened to OSHA years ago.

We cannot keep re-inventing the broken wheel into a “better” broken wheel.

It is just a matter of common sense.

Research Solutions, Inc.

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