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The 7 percent common equity requirement includes a 2.5 percent buffer that banks could draw down in times of crisis.
Another part of the equity requirement included a demand from the Fed that $2 billion of the total come from new equity.
A special committee of Enron directors later found that "the existence of this cash collateral for the Barclays funding was fatal to Chewco's compliance with the 3percentt equity requirement".
The bumiputera equity requirement was part of a policy directive introduced in 1971 by Mr Najib's father, Abdul Razak, Malaysia's second prime minister, and was intended to reduce the economic and social backwardness of the Malay majority.
The international Basel Committee on Banking Supervision agreed last year to raise the minimum common equity requirement for banks to 4.5 percent from 2 percent, with an added buffer of 2.5 percent, for a total of 7 percent of assets weighted for risk.
Sir John also pointed out that the Bank's own internal analysis, published last December, stressed that if the resolution regime failed the appropriate equity requirement for the system as a whole would be "at least 16 per cent" of risk-weighted assets.
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Higher equity requirements are not difficult to meet.
Academics from Stanford University and the Max Planck Institute regard Basel III's equity requirements as "dangerously low".
Regulators have allowed them to be used in limited quantities to meet increased equity requirements.
It is true that higher equity requirements may cause bank stock prices to decline.
Basel III equity requirements are the result of a highly political process.
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