Healthy banking system is the goal, not profitable banks

En el Financial Times, una carta firmada por un plantel impresionante de economistas académicos. La solución más razonable para los riesgos sistémicos que genera la banca es exigir mucho más capital. Tal cosa

Some claim that requiring more equity lowers the banks’ return on equity and increases their overall funding costs. This claim reflects a basic fallacy. Using more equity changes how risk and reward are divided between equity holders and debt holders, but does not by itself affect funding costs…

Y las opciones alternativas son peores

Proposals to impose a bank tax to pay for guarantees are problematic. High leverage encourages excessive risk taking and any guarantees exacerbate this problem. If banks use significantly more equity funding, there will be less risk-taking at the expense of creditors or governments.

Debt that converts to equity, so-called “contingent capital”, is complex to design and tricky to implement. Increasing equity requirements is simpler and more effective.

Y nada de favorecer la imaginación en la calificación de activos como capital

The Basel accords determine required equity levels through a system of risk weights. This system encourages “innovations” to economise on equity, which undermine capital regulation and often add to systemic risk. The proliferation of synthetic AAA securities before the crisis is an example.

Siempre se puede tener demasiado de una cosa (crédito)

the recent subprime mortgage experience shows that some lending can be bad for welfare and growth. Lending decisions would be improved by higher and more appropriate equity requirements.

La transición puede hacerse empezando por los dividendos

Temporarily restricting bank dividends is an obvious place to start.

Y sigue una lista con profes. Echo de menos a X. Vives.