Basel III 'Irrelevant,' Won't Stop Next Crash: Analyst
The historic banking reforms agreed in Basel over the weekend are pointless and won't stop the next crisis destined to hit the markets, Alpesh Patel, principal at Praefinium Partners, told CNBC Monday.
"In so many ways, it's so irrelevant," Patel said. "Crashes tend not to repeat themselves in the same manor, so we're fighting the last battle."
Banks will now have to increase the amount of low-risk assets they hold in the hope of averting the bailouts seen in the sector after the last financial crisis.
Patel did concede that there needs to be some protection from the circumstances that led to the crisis, but warned that it won't protect against future shocks to the stock market and economy.
"The next crash will not arise out of these reasons regardless of Basel III," he said.
Patel also criticized the longer-than-expected lead time that financial firms are allowed in which to implement the changes.
"The other problem with this is that the regulators have shown quite a degree of leniency time and time again… they don't to make the really tough decisions because they're too afraid of spooking the markets," he said.
Christopher Wheeler, director of equity research from Mediobanca, told CNBC the new Basel III rules struck a balance between the economy and banking regulation.
"If the economies had been stronger, I think we would have seen stronger regulation," Wheeler said.