Economic output could be 3.2 percent lower by 2015 than would otherwise be the case if rules such as tougher capital standards were not put in place, according to the Institute of International Finance, a Washington-based global banking lobby that represents more than 400 of the world’s biggest banks.
This would lead to 7.5 million fewer jobs being created over that time frame in the countries covered by the study, IIF said.
The report focuses on the US, the European Union, Japan, the United Kingdom and Switzerland.
The latest assessment of government responses to the 2007-2009 financial crisis from IIF comes as regulators are putting into place, or will soon, major new rules the industry is lobbying against.
On Tuesday IIF officials warned that with major world economies still struggling to recover from the crisis, regulators have to be careful not to go too far in trying to prevent another financial crisis.
“It is critically important that the macroeconomic impact of additional regulatory measures under discussion, as well as the impact of approaches to implement measures already taken, be a major consideration for governments and regulatory authorities,” Deutsche Bank Chief Executive Josef Ackermann said in a release.
Regulators pushed back against a similar report from IIF released in June 2010 saying it overstated the impact of new rules and did not give enough credit to the greater financial stability they could provide.
In particular, banks are lobbying against new international capital rules for the world’s largest banks that the heads of the Group of 20 leading and emerging economies are expected to endorse in November.
Banks argue that the new capital requirements will increase their funding costs which in turn will cause them to raise the cost of lending to their customers and hurt the economy. Regulators and some academics have said the increased costs will not be as high as the industry predicts and will provide needed stability to the banking industry.
The international capital agreement, known as Basel III, will require banks to maintain top-quality capital equal to 7 percent of their risk-bearing assets.
On top of that, global “systemic” banks — a group expected to include JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo — may have to hold as much as an additional 2.5 percent as a buffer.
Another 1 percent surcharge would be imposed if a bank becomes significantly bigger.
