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There were three solutions given and not one mentioned taking money away from the banks: One option is to make banks fund their activities with more equity fro
by janj 14y ago
There were three solutions given and not one mentioned taking money away from the banks:
One option is to make banks fund their activities with more equity from shareholders, a measure that would make them less likely to need bailouts (we recommend $1 of equity for each $5 of assets, far more than the 1-to-33 ratio that new global rules require). Another idea is to shock creditors out of complacency by making some of them take losses when banks run into trouble. A third is to prevent banks from using the subsidy to finance speculative trading, the aim of the Volcker rule in the U.S. and financial ring-fencing in the U.K.