Using different styles and tactics, Jamie Dimon of JPMorgan Chase & Co. and Vikram Pandit of Citigroup Inc. are making the same argument: policymakers have already done enough to rein in risk-taking. Doing more, particularly tacking on a capital surcharge for the largest firms, the CEOs insist, will crimp credit and in turn chill economic growth.

Dimon, living up to his brash image, has declared the Basel III international capital rules "anti-American," and urged U.S. policymakers to abandon the standards.

Pandit, strikingly less assuming, argued in a speech in Washington last month that Basel III won't work because it is too opaque. Pandit offered an alternative — creating a benchmark portfolio against which all institutions' risk analysis could be compared.

Bill Dudley, the president of the Federal Reserve Bank of New York, drew an unmistakable if unspoken comparison between the two CEOs when he addressed the Bretton Woods Committee's international council meeting right after Pandit.

"More statesmanlike engagement" by bankers "is both warranted and welcome," Dudley said.

He said policymakers are looking to the industry and its trade groups for "smart solutions to achieve essential financial stability objectives and not simply lobby against change."

Dudley dashed any hopes that regulators will be dissuaded from the up to 2.5% surcharge on systemically important financial institutions: "I appreciate that it is impossible to calibrate 'SIFIness' precisely, but this is not a valid argument for no surcharge."

Pandit smartly avoided that argument. Instead, he said the surcharge should be better tied to the risk posed by a company, whether that's a bank or any other type of financial firm. And the market, Pandit said, should help the government make these determinations.

"The missing element in Basel, I believe, is transparency. Under the current rules, it's hard to tell whether two banks with a declared 10% Tier 1 ratio are equally risky," Pandit said. "You don't know how they calibrate risk because you don't know enough about what those underlying assets actually are or how that risk is measured."

His solution: regulators create a benchmark portfolio and require all financial institutions to assess the riskiness of its assets. Companies would publicly report each quarter what they saw as the value-at-risk in the model portfolio and how they risk-weighted the assets.

Because the portfolio would be public, anyone from investors and analysts to journalists and customers could compare Bank A's assessment of the portfolio against Bank B's. Financial firms would be required to use the same models, the same methodologies on their own portfolios so the public could extrapolate from the benchmark portfolio how conservatively a bank was evaluating its own assets.

"Right now, loan-loss reserves, value-at-risk, stress-test results and risk-weighted assets are run only against an institution's actual portfolio, whose composition is known only to insiders and select regulators. The results of the tests, therefore, have no common frame of reference," Pandit said. "That could be changed simply by requiring financial institutions to run the exact same risk measures against the benchmark portfolio in addition to its own portfolio — and disclose the results of both tests publicly."

The benchmark portfolio would mirror the sorts of assets currently on bank's books: loans, government bonds, commodities, securities, etc.

Brian Leach, Citigroup's chief risk officer, said these quarterly disclosures about the public benchmark portfolio would "put everybody on a comparable basis."

"That's what VAR [value at risk] attempted to do. But as someone who understands the machinery behind VAR, it's not that clean," he said. "It sounds like it's an equation, but it's not."

Using the results from a regulator-mandated benchmark portfolio would give the market a much better idea of a company's risk appetite, and that in turn would influence a company's funding and capital costs.

"If you know that I am riskier than the guy next to me, you are going to charge me more for my debt or require that my return on equity is higher," Leach said. "You will take capital away from me and shrink me until you are happy about the returns."

Citigroup supports Basel III as the minimum standard; it wants Pandit's proposal to set the SIFI surcharge.

"The capital markets will look at the overall riskiness of an institution and essentially charge that incremental surcharge that the regulators are trying to figure out how [to] do," Leach said. "The marketplace would look and say these people are much riskier than those people and they are going to have to carry a surcharge."

As the protest against "Wall Street" spreads, it's hardly an easy time for Pandit to be pitching this idea. But regulators are worried about exactly the problem he's raising — Basel III is not a "standard." It will be implemented and enforced in different ways around the world. Even now, years before Basel III takes effect, complaints of cheating are being heard.

Leach said he thinks regulators will eventually agree they must "find some way to make a better comparison."

Maybe. Regulators are adamant that the time has come to stop talking about Basel III and start implementing it, including the surcharge. And yet the proposal they released in June and adopted last month has yet to be released in final form. Why? Because it's really complicated. What's more, it only applies to banks; regulators have said they will tackle institutions beyond banking next.

There is a growing faction of experts, including some regulators, who have concluded a way must be found to effectively harness the market to help police financial firms.

So Pandit has put down a marker, and made it clear he wants to be part of the solution. For that, he deserves some credit.

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