Basel naysayers delve into detail Time is running out for the opponents of Basel III. It has been nearly two years since regulators from 27 countries struck a landmark banking reform deal aimed at preventing future financial crises. The tougher bank capital requirements will be phased in from the end of the year, and regulators who make up the Basel Committee on Banking Supervision have promised a final version of planned liquidity standards in January. The heads of the Group of 20 leading economies have endorsed the standards and most countries are moving to impose them. But some bankers and industry groups are still fighting hard to water down particular portions of the package that they say will hit economic growth. Their efforts have become more sophisticated since 2010, when regulators blithely dismissed bold claims from the big global banks that the reforms would lead to 10m fewer jobs as gross exaggeration. Now industry groups are commissioning - or in some cases carrying out - targeted research projects to show how particular subsections of the new rules could have pernicious effects. A recent Harvard University study sponsored by the American Securitisation Forum took aim at the new liquidity coverage ratio, which will require banks to have enough cash and easy-to-sell assets to survive a 30-day market crisis. The Basel committee is deeply divided about what, if anything, should count as liquid assets beyond cash, sovereigns and high-rated corporate bonds. The Harvard study, authored by David Rand and Martin Nowak, who normally work on population dynamics and evolution, argues that a tight liquidity definition could prove self-defeating and that accepting a broader range of assets - including, not surprisingly, securitisations - would lead to greater stability. Researchers at the Royal Bank of Scotland, meanwhile, are training their sights on a subsection of the Basel capital rules aimed at counterparty risk. They picked a particular derivative, ran the calculations to determine the potential losses if the counterparty got in trouble and concluded that the Basel package would force banks to hold 3.4 times more capital than necessary. RBS says European banks could use the capital needed to cover this so-called CVA charge to support €1tn in additional corporate lending instead. The studies dovetail with positions being pushed by some European central bankers and politicians, who believe that the Basel rules may be exacerbating the continent's economic problems. But other regulators and academics are far more sceptical. They point out that liquidity dried up entirely in the securitisation market in 2008, and that troubles with counterparties like AIG, Lehman Brothers and bond insurers greatly exacerbated the financial crisis. And even if the CVA charge were dropped, there is nothing to guarantee that the freed-up capital would be used to support lending rather than some other less noble activity - like more derivatives. Some concessions to the industry are likely when Basel meets again at the end of the year and when the EU and individual countries enforce the global rules at home. But industry is unlikely to get all that it wants, at least this time. Even as Basel III nears completion, a small but growing cadre of regulators have begun to argue that the rule book has become too complicated and the whole should be junked. Andy Haldane, a Bank of England official, recently called for an end to the practice of allowing banks to measure their own risk when setting capital requirements, and Thomas Hoenig, a director of the US Federal Deposit Insurance Corporation, wants to stop using risk entirely and rely exclusively on a "leverage ratio" of equity to total assets. Neither solution is palatable to the banks, who employ armies of number crunchers to reduce - they prefer to say "optimise" - their capital requirements by massaging the way they measure the riskiness of their balance sheets. Not surprisingly, some executives are also less than enthusiastic about a Basel Committee project that is seeking to compare the way different institutions measure risk, with an idea towards greater standardisation. But you can be sure the industry will seek to exploit whatever solutions emerge. Get ready for the starting gun on Basel IV.