Tuesday, June 21, 2011

Capital And Leverage

FLG has been going on and on about how leverage is the real issue when it comes to systematic financial risk and everything else is a distraction. So, he read this paragraph with glee:
Capital matters. Let me put that another way. The current fight over additional capital requirements for the banking industry, eye-glazing though it is, also happens to be the most important reform moment since the financial crisis broke out three years ago. More important than the wrangling over Dodd-Frank. More important than the ongoing effort to regulate derivatives. More important even than the jousting over the new Consumer Financial Protection Bureau.

FLG would just like to add that it's not just a little more important than those things it's orders of magnitude more important.

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