* Basel III calls for 7 pct ratio for top-level capital

* Each country finalizing their version of global pact

* Fed proposal does not give in to U.S. banks’ requests

By Dave Clarke

WASHINGTON, June 7 (Reuters) – The Federal Reserve rejected pleas by the U.S. banking industry in releasing on Thursday a rigorous interpretation of an international agreement on higher capital standards for banks, known as Basel III.

U.S. banks have pushed the Fed, for instance, to allow them to more heavily count mortgage servicing rights and the unrealized gains and losses of certain securities toward their capital requirements than allowed by Basel III, but the U.S. central bank’s draft rule closely follows the international agreement.

“Some of the major, major things the industry, particularly the big banks, were looking for it sounds to me like the Fed showed them no mercy,” said Karen Petrou, managing partner of Washington-based Federal Financial Analytics.

 

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