Will Financial Regulation Make Us Safe? (Part III)
This is the third post on the topic. As promised, I will attempt to address whether the currently proposed regulatory overhaul can help mitigate against the risk of excessive risk-taking and speculative behavior. That is, can the prevention of “too big to fail,” increased capital ratios among large banks, and the 2,315-pages of financial regulatory system legislation act as the “voice of reason” which will prevent future financial crises?
Well, a lot has happened since my past post:
- Central bank governors and regulators finalized a package that will recommend that banks more than triple the amount of top quality capital they must hold to withstand shocks without state aid (the so-called Basel III requirements);
- Six banks in the U.S. collapsed, bringing the total to 124 this year as the ramifications of the credit crises continued to take a toll (including one right here in West Allis, Wisconsin); and
- Gordon Gekko plans his return as the movie Wall Street: Money Never Sleeps premiers in theaters this Friday – I am sure that you will remember the speech from the first movie: