Banking's Past, Present, and Future
Have you ever watched a major league infielder boot a routine ground ball and thought: “For the amount of money he’s being paid, he shouldn’t make that kind of rookie mistake”? As a fan, it is frustrating. That is how we should all feel about the crises that have rocked the financial world during the … Read more
The Financial Times reports that a study conducted by Bank of England researchers finds that the current level of risk-weighted capital held by banks (about 7 percent) is woefully inadequate to protect against future financial crises. Calibrating their model with data from 1821-2001, the authors find that an astounding 53 percent capital to risk-weighted assets … Read more
Carried away by ever-rising real estate prices and aided and abetted by new types of financial instruments, the financial system’s overindulgence in risk has left taxpayers with a nasty hangover, a hefty tab, and a desire to make someone pay. Commentators have blamed the financial meltdown on the attitude towards risk generated by banks’ corporate … Read more