The Bankers’ Capital War
Almost everyone nowadays agrees that banks need more capital. But a wide gap has opened up between financial authorities and the banks on the costs and benefits of the much higher capital requirements that regulators are now demanding.
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PARIS – Almost everyone nowadays agrees that banks need more capital. Christine Lagarde chose to make it her first campaign as Managing Director of the International Monetary Fund. And conventional analyses of the financial crisis focus on the weak capital base of many banks, which left them with insufficient reserves to absorb the losses they incurred when asset prices fell sharply in 2007-2008.