For these organizations, the incremental cost of developing advanced Basel II systems can be substantial, and they may appropriately choose not to adopt Basel II, especially at the earliest possible date.
As we near the completion of this journey, I’d like to recap why we chose to propose the Building Block Approach, which adjusts and aggregates existing legal-entity capital requirements to produce an enterprise-wide capital requirement. The BBA is meant to address one of our biggest challenges in supervising companies that engage in both banking and insurance operations, which is how different these businesses are.