Teaching and research distractions have again kept me from blogging for a while. I guess my defense is that learning the facts is always an important precursor to writing about them. This morning, however, I decided to divert from class preparation to add my praise for what is surely destined to be the BOOK OF…
As expected, the big banks are stepping up their campaign against tighter regulation. This week Mr Dimon, CEO of JP Morgan Chase intensified his foray against the stricter requirements of Basel III, now looming very real. Patriotism is, as always, run up the mast: the capital requirements are “Negative for America.” This notwithstanding the fact…
Professor Anat Admati, one of the distinguished economists who were recently widely noted as calling the bluff on bank CEO assertions about the negative effects of stricter capital requirements, has written a letter addressing the nonsense touted in the Financial Times by such bankers and their supporters. Since many readers will not have access to…
This weekend the G20 Summit takes place in Seoul. The Basel III enhanced capital requirements (among other standards) come up for adoption. Even as seasoned present and former regulators, such as Mervyn King and Paul Volcker, suggest that the new standards might not be sufficient, bank CEOs such as Mr. Pandit of Citigroup and Mr.…
There is much positive publicity about the new rules agreed upon at the Basel Committee. And there is no doubt that on their face they are much stricter than the old ones, requiring banks to double their level of real core capital and add a buffer of 2.5%. This means that, while banks could use…
Before anyone ever discusses the subject again, or listens to another banker bellyaching about how increased capital requirements will slow down economic growth and hurt everybody, he or she must read the scholarly study by an international group of researchers entitled “Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity…
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