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"This emphatically does not mean I think there’s nothing we can do to make the banking system safer; like practically everyone else who writes about economics,

"This emphatically does not mean I think there’s nothing we can do to make the banking system safer; like practically everyone else who writes about economics, I believe in higher capital requirements for banks, better resolution mechanisms for those that fail and more prudential regulation of how they can invest." (from the end of your article) Sounds like McCardle would agree with some of the Swedish approach. "Sweden has taken a lead on regulation, imposed some of the highest capital ratios in the rich world, with minimum levels of core tier-1 capital (the best sort) set at 12% from 2015, compared with a minimum of 7% by 2019 under Basel 3... Sweden’s banks have been earning respectable profits, are able to pay dividends and have seen their share prices soar... Swedish banks are generating among the highest returns on equity among rich-world banks. Number-crunchers at Citigroup reckon that the big Swedish lenders will be generating returns of about 15% over the next few years....Australian and Nordic banks are the most cost-efficient…in the world... Credit-default-swap spreads for Sweden’s big banks, a measure of default risk, are significantly lower than for many of their peers" Anything without risk is impossible. Including banking. Nobody's really arguing otherwise, just that we could bank with a lot less of it and some states appear to be doing that.

tsotha 13y ago
The part I was objecting to was the "safe" part. What we've seen over and over now is you never really know how resilient you banking sector is until you hit a real crisis.
- nikatwork 13y ago
  Part of these systems include surprise "fire drills", where auditors will appear and present adverse market conditions to a bank. The bank will then have 30 days to successfully respond to the simulation. Kind of like stress testing for banks... What we've actually seen over and over is that banks without sufficient cash reserves or proper internal and external auditing get whomped in a real crisis. Then expect taxpayers to bail them out.

tsotha 13y ago

The part I was objecting to was the "safe" part. What we've seen over and over now is you never really know how resilient you banking sector is until you hit a real crisis.

nikatwork 13y ago
Part of these systems include surprise "fire drills", where auditors will appear and present adverse market conditions to a bank. The bank will then have 30 days to successfully respond to the simulation. Kind of like stress testing for banks... What we've actually seen over and over is that banks without sufficient cash reserves or proper internal and external auditing get whomped in a real crisis. Then expect taxpayers to bail them out.