Banks. Consider one crucial indicator of financial strength: equity capital
Banks avoided debilitating losses in large part because the Fed and the Treasury pledged trillions of dollars to stabilize markets and help borrowers make good on loans.
Authorities successfully pushed for more capital in the aftermath of the 2008 financial crisis, but never went far enough.
Capital levels have waned along with political will: As of June 2021, that tangible equity ratio stood at around 6.4%.
Fed all but ended the formerly annual “living wills,” challenging banks to explain how, if they were failing, authorities could dismantle them quickly with minimal collateral damage.
Now, for the largest institutions, the full plans are required only once every four years. Imagine trying to wind down Lehman Brothers in 2008 using instructions drafted in 2004.
Bloomberg Editorial Board 14 september 2021
IMF Basel Lord Turner
https://englundmacro.blogspot.com/2012/10/imf-basel-lord-turner.html
The risk-weighted Basel capital adequacy regime is fundamentally flawed.
John Plender, FT 6 August 2017
https://englundmacro.blogspot.com/2017/08/the-risk-weighted-basel-capital.html
Kommentarer