Citigroup Inc. Chief Executive Vikram Pandit offered up a scathing review Monday of Basel III, saying the new rules do nothing to reduce pro-cyclicality or to level the playing field among different countries and differently regulated financial institutions.

If adopted as currently drafted, the new standards would likely impede credit availability when, and where, it is most needed, and could shift business to shadow markets that fill a niche akin to the way mortgage brokers exploited regulatory convention prior to the housing bust, Pandit said.

In a speech in New York at the Buttonwood Gathering, a two-day finance conference sponsored by The Economist, Pandit said that "under Basel, the sweet-spot business model for banks in the developed world will be to take deposits from mom and pop ... and lend to big businesses."

He criticized proposed rules that, for the purpose of setting capital requirements, would judge the risks tied to consumer and small business loans based almost exclusively on FICO scores and on the track record for these types of loans in 2008 to 2010, a period of exaggerated stress. With the judgment of bankers and longer-term credit profiles de-emphasized, "the past," Pandit said, "literally will count more than the future."

Pandit found occasion to praise Basel, however, on its efforts to reduce leverage in the system with new capital requirements. Last week Pandit told investors that he was confident Citi would be in compliance with new requirements based on the latest information coming out of Switzerland.

Pandit's assessment was a striking contrast to the one conference-goers heard earlier in the day from Bank of England Governor Mervyn King, who said one of the main reasons why Basel III would fail to prevent another crisis is that its capital requirements aren't tough enough.