2012-09-13wsj.com

New financial rules likely will result in a relatively small increase in the cost of loans in the U.S., Europe and Japan, according to a study published Tuesday by the International Monetary Fund.

The study is the latest to challenge the argument mounted by banks that a number of new rules, especially stricter capital and liquidity requirements, will crimp lending and raise the cost of loans to borrowers, hurting economic growth.

In the long term, lending rates likely would rise 0.28 percentage point in the U.S., 0.17 percentage point in Europe and 0.08 percentage point in Japan, the study found.

"Those costs cannot possibly exceed the benefits" of the new rules, including increased stability, Douglas Elliott, one of the paper's authors, told reporters in a conference call. Mr. Elliott, a 20-year investment-banking veteran who now is a fellow at the Brookings Institution, wrote the study with senior IMF economist André Oliveira Santos.

But but but... the banks won't be able to lend with such basic safety-and-soundness (sanity?) rules, don't you know!? As we've said around here for quite some time, give us the true costs up front. Currently we are just paying for them later in underwater loans, foreclosures, and a broad spectrum of human suffering. This isn't "saving" anything.


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