Large Bank Examination Workshop February 2026

Enhancement to Basel II • Post-crisis global initiatives to strengthen the financial regulatory system • July 2009 Enhancement to Basel II – mostly in trading book

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Basel II Upgrade • Pillar 1 – Standardized approach  Higher risk weights for commercial real estate securitizations - almost doubled  Commercial real estate always hurts banks in a financial crisis (1983, 1989, 1998, 2008, now?)  Operational criteria for using external ratings prescribed

 Reliance on ratings had led to big problems with AAA-rated subprime CDOs that were garbage.

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