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CML calls for rethink of Basel II

Council of Mortgage Lenders head of research Bob Pannell has called for regulators to look again at Basel II as he claims it is not achieving its goal of regulating lending.

Speaking at a Treasury select committee session on the economics of the housing market this morning Pannell told MPs he thought the rules were exacerbating the economic cycle rather than moderating it.

Pannell said: “We should have another look at the Basel II framework as it does seem to be accentuating both the upward and downward cycle and it does not seem to be achieving one of its main aims which is to ensure lending is on an even keel.”

Also giving evidence at the session this morning professor Muellbauer from Nuffield College said he agreed with Pannell and argued that pro-cyclical capital requirements were unhelpful.

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