Since it was an excessive risk-aversion that caused the crisis there is nothing wrong with a little more of risk-taking.
Sir the commissioner of Japan’s Financial Services Agency Takafumi Sato warns that “Tightening capital rules could increase risk-taking” July 1. Given that the current minimum capital requirements concocted in Basel authorize a marginal leverage of bank equity of 62.5 to 1 if the borrower has an AAA to an AA- rating it is hard to even comprehend what increased risk taking he refers to.
Excessive risk taking was not the problem. It was the excessive risk-aversion of the regulators that created an amazing regulatory bias in favour of what was perceived as being of little risk which brought this crisis upon us. In this respect we might in fact need some increased risk-taking.
This crisis did not originate from risky Argentinean railway projects but from investing in the safest assets, houses, in the safest country, the US, in securities rated AAA. Do you call that excessive risk taking?
Madoff got a sentence of 54.900 days. Should not the regulators spend one day in the slammer just for the sake of justice, just to help us restore some minimum accountability?
Excessive risk taking was not the problem. It was the excessive risk-aversion of the regulators that created an amazing regulatory bias in favour of what was perceived as being of little risk which brought this crisis upon us. In this respect we might in fact need some increased risk-taking.
This crisis did not originate from risky Argentinean railway projects but from investing in the safest assets, houses, in the safest country, the US, in securities rated AAA. Do you call that excessive risk taking?
Madoff got a sentence of 54.900 days. Should not the regulators spend one day in the slammer just for the sake of justice, just to help us restore some minimum accountability?
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