Category Archives: Capital requirements

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Don’t touch my repo

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The repo industry has dire warnings for anyone who wants to rein in its market. The warnings are a sobering, inside look at how important the repurchase market has become to the world’s flow of credit. From the International Capital … Continue reading

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Shadow banking, part 2: Lack of shadow master plan means impact of new rules is uncertain

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The shape of shadow banking reform is now clear. Congress and regulators are going to put a bunch of new rules in place, but they’re not going to articulate a coherent vision of what shadow banking should, or should not, … Continue reading

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Why banks had so much skin in the game

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One of the great surprises of the financial crisis of 2007-2008 was that commercial and investment banks held one-fourth of the mortgage-backed securities they’d supposedly sold to investors. This surprise shot a big hole in the pre-crisis theory that securitization … Continue reading

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Banks prepare to fight Basel’s repo-related ratios

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The only rules that have been proposed specifically to lessen the systemic risk caused by the repurchase market will force the largest banks to do business in a more cautious way, and the banks are gearing up to fight them, … Continue reading

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Thoma: “Critical vulnerabilities remain”

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Get ready for the next financial crisis, cautions University of Oregon economist Mark Thoma in his April 23 blog Economist’s View. That’s because we have not taken, and are not likely to take, the needed steps to prevent runs on … Continue reading

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Will ‘ring-fencing’ work better than ‘firewalls’ did?

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We’re hearing a lot about “ring-fencing” these days. That sounds suspiciously like “firewalls” to some of us who covered the S&L calamity 20 years ago. Sheila Bair, chairman of the Federal Deposit Insurance Corp., thinks bank holding companies should ring-fence their investment banking operations … Continue reading

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An idea for enforcing ‘skin in the game’

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Joining the growing chorus of economists who are calling for financial institutions to finance themselves with more equity and less debt, a new study recommends two levels of capital. To the core capital requirements already applied to banks today, the … Continue reading