September 14, 2012

A wicked question for the candidates for governor of Bank of England

But that is under normal circumstances. Currently though, given the difficulties with the banks, even more important and urgent than that, is to find a better regulatory paradigm. And for this purpose, I would begin by asking each candidate for governor, the following simple question: 

When do banks most need capital, when the risky turn out risky, or when the “not-risky” turn out risky?

And then follow it up with a “So?”