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  • Citigroup Inc. (NYSE:C) - Vikram Pandit Says Strict Regulations Bad for Banks

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    Monday Oct. 25, 2010 at 11:38 pm EST
    Citigroup Inc. (NYSE:C) not Happy with Basel III 
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    On Monday, Citigroup Inc. Chief Executive Vikram Pandit criticized new capital global rules saying that, the "reforms are headed in the right direction," but in some cases "don't go far enough" or even make the problems that led to the financial crisis worse. He supported the higher capital standards under the so-called Basel III rules, and said that "will help keep the banking system safer." But he warned that further rise in those capital standards would have the opposite effect. 
    "There is a point beyond which 'more' is not necessarily 'better' -- for the banking system, for consumers, or for the economy," he said. 12 percent of the company is still owned by the U.S. government even after 3 taxpayer-funded bailout. Pandit also said that rise in the capital requirements could hinder the economic recovery, "by raising the cost of credit precisely when credit is needed the most" and preventing many potential borrowers from qualifying for loans.

    The Basel III rules encourages the creation of new shadow banking system, by not regulating non-bank financial companies and regulating only the banks, Pandit said. He further added, "Shifting risk into unregulated or differently regulated sectors won't make the banking system safer. On the contrary, overall risk in the system could actually rise." "The new rules don't cast a wide enough net, and they create new incentives to rebuild some of the worst features of the very environment that led to the crisis." Pandit ended his statement by opening a transparent debate on the proposed Basel III rules. He indicated towards the lawmaking process that led to the enactment of the new U.S. Dodd-Frank financial reform law, saying it was "relatively open, transparent, and reported. Basel should be debated just like Dodd-Frank -- in the open." 
    Shares of Citigroup Inc. closed at $4.11 on Monday at resistance level of $4.19. The resistance levels above are at $4.41 and $4.97. The support levels below are at $4 $3.87, $3.7. Earlier this week Citigroup Inc.  Offered a New Deal to Lehman Bondholders . Citigroup came up with revolutionary technology with its New credit Cards.
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