Basel 3 plan trashed by UK Prime Minister Cameron - UK won't sign up to an idiotic plan !

http://www.telegraph.co.uk/finance/financialcrisis/9242279/Chancellor-George-Osborne-tells-EU-he-wont-sign-Britain-up-to-idiotic-Basel-III-plan.html

During angry exchanges, the Chancellor told a meeting of Europe’s finance ministers on Wednesday night that EU measures to implement “Basel III” bank rules would be ridiculed by financial markets and the banking sector because it so clearly failed to enforce clear and tough rules.

“We are not implementing the Basel agreement as anyone who will look at this text will be able to tell you. I’m not prepared to go out there and say something that will make me an idiot five minutes later,” he said.

After 10 hours of talks, a furious Mr Osborne said that since he had been forced to cancel a Downing Street dinner party he was ready to keep EU finance ministers at the negotiating table all night until they got it right.

“I have eight people turning up for dinner in 15 minutes in London so we might as well stay here and get it sorted tonight,” he said.

The EU is planning legislation requiring banks to increase levels of highest-quality capital, such as equity and reserves, to 7pc by 2019.

"If we duck the challenge of implementing Basel we could face very important challenges to confidence in Europe this year," the Chancellor said.

"We certainly won't fool the financial markets, who will continue to be wary of investing in Europe and investing in European banks.

"Are we implementing the Basel agreement or not? It won't just be a political failure. It could be an economic failure for this continent."

Britain is insisting national regulators should be able to impose tougher requirements, on a case-by-case basis, without having to ask permission from EU regulators.

The question is seen by Britain as a national sovereignty issue, a protection for taxpayers who would be forced to bail out a bank that failed due to capital requirements being set too low.

“National taxpayers have to underwrite banks, so it should be a national decision,” said a British official.

Mr Osborne has the support of Spain and Sweden for the “flexibility” of being able to impose stiffer capital requirements without having to get prior EU approval.

France, with the support of some UK banks, is backing gentler rules on the definition of risky assets and a Brussels veto over national authorities that want to impose extra capital requirements.

Francois Baroin, the French finance minister, criticised the British push for rules giving "a very large degree of freedom beyond the control" of the EU because it would create a "distortion of competition" penalising weak banks.

Talks continued in Brussels on Wednesday night on the capital requirement directive ahead of the scheduled meeting of EU financial ministers on May 15.

Negotiations are focused on a "compromise" that would let national regulators impose capital surcharges of as much as 3pc over the EU 7pc minimum on banking activities at home and abroad.

The so-called "Basel III" agreement was agreed by the world's leading economies after the 2008 financial crisis showed many banks did not have enough of a capital cushion to absorb sudden losses on loans.