Tuesday, February 9, 2010

Finance Reading

FLG found this presentation (PDF) via Rortybomb, which FLG found via Dave at LOG.

Page 7 has a decent graphic explanation of what FLG thinks Barney Frank was mumbling about a few days ago.


FYI. VaR is Value at Risk. Basically, what this graph is saying is that "appropriately staffed and resourced" regulators could make an acceptable, if somewhat arbitrary, decision about where value at risk becomes too high and then require higher capital requirements.

FLG's skeptical because it falls to the "more resources" complaint, which, as he has already written many times, including today, is the domain of losers. However, in this case, he happens to agree regulators are understaffed and resourced. However, however, banks will always be better staffed and resourced. So, he's not entirely sure that a regulator can ever posses enough talent to adequately regulate the banks.

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