thorough analyses of each institution's basel ii capital results and basel ii's impact on aggregate minimum required capital in the u. s. banking system. the u. s. regulators are united in their belief that no bank should be permitted to operate under basel ii until it has proven itself ready to do so. in other words, we plan to have very high standards for basel ii qualification. for instance, a bank will be able to move from the parallel run to the first transitional floor period only after its primary supervisor has given it permission to do so - - and only after that supervisor has thoroughly evaluated the bank's risk - management methodologies and its ability to calculate minimum regulatory capital using the new framework. similarly, a bank will only be allowed to move to each successive floor, as well as to the full basel ii minimum capital calculation without floors, upon a finding by the primary supervisor that it is ready, following a rigorous qualification process. to reiterate, during and after the transition to basel ii, supervisors plan to rely on ongoing, detailed analyses to continuously evaluate the results of the new framework and ensure prudent levels of capital. and to be quite clear, the federal reserve believes that strong capital is critical to the health of our banking system. we also believe that basel ii will help us continue to ensure that u. s. banks maintain capital levels that serve as an appropriate cushion against unexpected losses. as we have mentioned before, we will continue to use existing prudential measures to complement basel ii. for example, the current leverage ratio requirement - - a ratio of capital to total assets - - will remain unchanged for all banks, whether or not they are subject to the basel ii framework. also, supervisors will continue to enforce existing prompt - corrective - action rules in response to declines in capital. both the leverage ratio and prompt - corrective - action rules are fully consistent with basel ii. proposals to amend basel i of course, those of you here today have also been following discussions about possible changes - beyond basel ii - - to the existing regulatory capital rules. first of all, we expect only one or two dozen banks to move to basel ii in the near term. the vast majority of u. s. banks would be able to continue operating safely under basel i as amended through the rulemaking process. the basel i framework has already been amended more than twenty - five times in response to changes in the banking environment and a better understanding of the risks of individual products

implementation responsibilities. the federal reserve is committed to its long - standing practice of ensuring that all its rulemakings be conducted in a fair, open, and transparent manner. accordingly, we are disclosing on our public website summaries of all communications with members of the public – including banks, trade associations, consumer groups, and academics – regarding matters subject to a proposed or potential future rulemaking under the act. in addition to our own rulemakings and studies, we have been providing technical and policy advice to the treasury department as it works to establish the oversight council and the related office of financial research. we are working with the treasury to develop the council ’ s organizational documents and structure. we are also assisting the council with the construction of its framework for identifying systemically important nonbank financial firms and financial market utilities, as well as with its required studies on the proprietary trading and private fund activities of banking firms and on financial - sector concentration limits. additionally, work is well under way to transfer the federal reserve ’ s consumer protection responsibilities specified in the act to the new bureau of consumer financial protection. a transition team at the board, headed by governor duke, is working closely with treasury staff responsible for setting up the new agency. we have established the operating accounts and initial funding for the bureau, and we have provided the treasury detailed information about our programs and staffing in the areas of rulemaking, compliance examinations, policy analysis, complaint handling, and consumer education. we are also providing advice and information about supporting infrastructure that the bureau will need to carry out its responsibilities, such as human resource systems and information technology. well before the enactment of the dodd - frank act, the federal reserve was working with other regulatory agencies here and abroad to design and implement a stronger set of prudential requirements for internationally active banking firms. the governing body for the basel committee on banking supervision reached an agreement a few weeks ago on the major elements of a new financial regulatory architecture, commonly known as basel iii. by increasing the quantity and quality of capital that banking firms must hold and by strengthening liquidity requirements, basel iii aims to constrain bank risk - taking, reduce the incidence and severity of future financial crises, and produce a more resilient financial system. the key elements of this framework are due to be finalized by the end of this year. in concordance with the letter and the spirit of the act, the federal reserve is also continuing its work to strengthen its supervision of the largest, most