In the following video, Motley Fool financial analysts Morgan Housel and Matt Koppenheffer discuss the Basel Committee's recent softening of its Basel III liquidity capital rules. While stringent requirements that banks maintain a certain level of cash liquidity do protect against another liquidity crisis like the one that led to the financial disaster in 2008, they hamper banks' ability to lend money if the banks are forced to maintain that money on their balance sheets; it slows economic growth. Morgan tells us here how the new softening of the rules gives banks more options, but doesn't come without risk. 

 

Matt Koppenheffer owns shares of Bank of America. Morgan Housel has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days.

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