This is a very untimely moment to force the rebuilding of bank equity
Sir often when I mention the impact of the Basel II regulations many observe that they were not really in effect, completely ignoring that just the announcement of these regulations, and especially their approval by the G10 in June 2004 immediately led the financial sector to initiate adapting to them.
When Caitlin Long writes “Wall of US maturing debt threatens to extend the crunch” November 12, she somehow seems to ignore that much of the effects of all the speculative quality debt that is coming up for refinancing in the next years are already here, which is one of the reasons why regulators should not wait to lower the capital requirements for this type of BB+ or below rated debt.
Capital requirements should be increased in a pro cyclical way when times are good and reduced when times are bad. It does not really help to rebuild insufficient capital reserves at the wrong time… that will just make the capital reserves even more insufficient.
When Caitlin Long writes “Wall of US maturing debt threatens to extend the crunch” November 12, she somehow seems to ignore that much of the effects of all the speculative quality debt that is coming up for refinancing in the next years are already here, which is one of the reasons why regulators should not wait to lower the capital requirements for this type of BB+ or below rated debt.
Capital requirements should be increased in a pro cyclical way when times are good and reduced when times are bad. It does not really help to rebuild insufficient capital reserves at the wrong time… that will just make the capital reserves even more insufficient.
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