We still need to fix financial supervision
new wave of Basel III rules, sparking a furious backlash from Wall Street figures such as David Solomon, head of Goldman Sachs, who snipes that the measures “have gone too far”.
This is partly just Wall Street whingeing. Before 2008, the capital cushions of the big banks were ridiculously thin, and the rules around subprime mortgage securitisation, for example, were too lax.
Most notably, while there has been endless noise about capital and liquidity standards, there has been a woeful lack of attention paid to other realms of finance.
There is still far too little scrutiny of non-bank financial groups.
To understand this, it is worth perusing Good Supervision: Lessons From The Field, a new paper from the IMF.
The title might sound dull, but the message is scathing.
Gillian Tett FT 14 eptember 2023
https://www.ft.com/content/a043be68-ab6a-467c-af74-0aec1347ddd9
Banks Need to Worry About Shadow Banks
Global supervisors at the Financial Stability Board call these non-bank financial intermediaries.
https://englundmacro.blogspot.com/2022/11/banks-need-to-worry-about-shadow-banks.html
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