Trump’s Political Uncertainty Blocking Deal at Basel Meet

Global banking regulators meeting in early March are not expected to reach agreement on capital requirements rules to keep lenders stable in a crisis, two people close to the talks said.

Approving any deal would be difficult until US President Donald Trump's Administration appoints a new top financial supervisor at the Federal Reserve, the people said, news outlets reported.

"There will be appointments in the United States and we have to be a little bit patient. There is a sequence for these things," one of the people said. "Will there be an agreement in the forseeable future? Then, yes."

The Basel Committee of banking regulators from nearly 30 countries meets on March 1-2 in Switzerland.

Last November it was unable to reach a deal on reforms to inject more consistency into how banks assess risks from loans to determine the size of their capital buffers.

The reforms supplement a global "Basel III" accord already in place, forcing banks to hold more capital after lenders had to be rescued in the 2007-09 financial crisis, Reuters said.

Basel's oversight body, the Group of Central Bank Governors and Heads of Supervision—and chaired by European Central Bank President Mario Draghi—had to postpone a January meeting aimed at brokering a deal because of splits over finer details.

The Basel Committee has largely done what it can and now it is up to GHOS, a body whose members includes the Fed.

Trump Is X Factor

Political uncertainty is set to undermine the major post-crisis work of the Basel Committee.

Regulators are anxious to see who Trump will name as Fed banks supervision chief after he signed an executive order to review regulation to help banks lend more.

It triggered concern in Europe that a global approach to banking rules would be fragmented. Some European regulators expect the United States to focus more on easing rules that are specific to US banks and not ditch global standards altogether.

"What's important is that US regulators remain committed to coming back to the Basel table. We are patient," one of the people said.

Dysfunctional White House

The Trump White House abruptly dismissed a senior National Security Council aide on Friday....The aide, Craig Deare, was serving as the NSC's senior director for Western Hemisphere Affairs. Earlier in the week, at a private, off-the-record roundtable hosted by the Woodrow Wilson Center for a group of about two dozen scholars, Deare harshly criticized the president and his chief strategist Steve Bannon and railed against the dysfunction paralyzing the Trump White House, according to a source familiar with the situation, politico.eu reported.

He complained in particular that senior national security aides do not have access to the president—and gave a detailed and embarrassing readout of Trump's call with Mexican President Enrique Pena Nieto.

And last Monday, he fired his national security advisor, Michael Flynn, after reports that Flynn had discussed sanctions with Russia's ambassador before Trump's inauguration.

Trump on Sunday will interview acting national security adviser Keith Kellogg and three other candidates to fill the vacancy left by the firing of Flynn, the White House said on Saturday.

Global financial regulators are struggling to adjust to the world of Trump.

Despite Trump being in power for less than a month, the political rhetoric is changing dramatically. The recent events mean it’s now unclear what stance the US will take at the Basel Committee.

The Basel Committee’s powerful board of supervisors may examine the rules on March 19.

The world’s biggest banks are poised to warn investors that Trump has the potential to roil global markets and impact their firms by redrawing regulations and limiting the free movement of employees, according to people familiar with the matter.

Although banks stand to benefit from higher interest rates and Trump’s pledge to relax rules, heightened volatility could affect trading and a slowdown in global commerce may curtail deal making as the president turns his attention to trade policies with China and Mexico.