risk parameter estimates than those in qis4. recall that there have already been three rounds of u. s. public comments on the basel ii consultative papers between 1999 and 2004 ; an advance notice of proposed rulemaking ( anpr ) in 2003 ; and numerous agency discussions with congressional committees, banking groups, and individual banks. all have resulted in significant modifications to the proposal. once published, the npr and the supervisory guidance will once more elicit comments that could result in further revisions. particularly given its delayed issuance, the npr must solicit feedback from core and potential opt - in banks as to whether the current timeline for implementing basel ii in this country needs to be delayed or can be retained. looking forward, i agree with my colleagues at this table that it is prudent to delay the npr in order to see what we can learn from further review of qis4 data, recognizing at the outset that final answers will not be forthcoming because the requisite databases and risk - management systems are not yet in place. i hope that we can return to the npr before midyear, present it to the office of management and budget for its review, as our occ and ots colleagues must do, and release the npr in the fall. with such a schedule, one might hope that the parallel running period, currently scheduled for 2007, need not be delayed. but, as i noted earlier, it is important for the agencies to get feedback on this issue during the npr comment period. the views of banking organizations will provide critical insights into the feasibility of the scheduled 2008 start date for the transition run. once we have the views of the banking organizations, the agencies will be in a better position to reach a consensus on the timeline. basel ii has the potential to be an important supervisory step forward. the basel i framework is being arbitraged aggressively and provides us with less and less reliable measures on which to base a regulatory capital requirement for our largest and most complex banking organizations. moreover, banks have spent tens of millions of dollars preparing for the u. s. implementation of basel ii and have contracts for further investment. they are awaiting the npr, the guidance, and the final rules. their global competitors are proceeding, and u. s. banks will be eager to avoid being placed at a competitive disadvantage. i might add that, as supervisors, we believe that the core risk - measurement and risk - management improvements contained in basel ii are appropriate, regardless of how the future accord is

. interests in the complex and dynamic basel negotiation process. the u. s. banking agencies need to preserve our current flexibility to respond to basel issues if we are to develop a set of capital rules that are useful and productive for u. s. banks and thrifts. moreover, it is possible that the agencies are more likely to implement effectively an agreement that they helped shape than they would be one that was imposed on them and for which they did not understand fully the rationale. while we urge the congress not to move forward on this bill, we look forward to keeping congress fully informed as the basel process continues. i will be pleased to answer your questions.