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Congress Flirts with Disaster on Bank Leverage Ratios

1 pointsby antiviralover 7 years ago

1 comment

antiviralover 7 years ago
What could possibly go wrong here:<p>&quot;Because their judgments about risk had been so wrong, regulators after the financial crisis have made greater use of capital standards that don’t rely on government risk assumptions. For big banks, the most important of these is the “supplemental leverage ratio,” which requires big banks to fund themselves with at least 5% common equity, effectively limiting their reliance on debt to 95%.Section 402 would weaken this modest constraint on leverage by excluding central-bank deposits from this debt-to-equity ratio.&quot;