Statement of Sheila C. Bair Chairman Federal Deposit Insurance Corporation on the Interagency Proposal Regarding the Basel Capital Accord

Basel IIFederal Deposit Insurance Corporation (FDIC)General Information
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Statement of Sheila C. Bair Chairman Federal Deposit Insurance Corporation on the Interagency Proposal Regarding the Basel Capital Accord; before the Committee on Banking, Housing and Urban Affairs; U.S. Senate; 10:00 A.M.; Room 538, Dirksen Senate Office Building September 26, 2006

Chairman Shelby, Senator Sarbanes and members of the Committee, I appreciate the opportunity to testify on behalf of the Federal Deposit Insurance Corporation (FDIC) concerning the Basel II international capital accord.

The U.S. banking system is a network of institutions that are highly leveraged and whose financial health bears directly on the health of our broader economy. Significant problems or a lack of financial flexibility at many small banks, or at one or more large systemically important banks, can have contagion effects that impose significant costs on the deposit insurance funds and the overall economy.

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