{"id":189335,"date":"2010-04-15T14:49:00","date_gmt":"2010-04-15T19:49:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2010\/04\/15\/not-a-shocker\/"},"modified":"2010-04-15T14:49:00","modified_gmt":"2010-04-15T19:49:00","slug":"not-a-shocker","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2010\/04\/15\/not-a-shocker\/","title":{"rendered":"Not a Shocker"},"content":{"rendered":"

The big banks are strenuously objecting to the Basel proposals to strengthen capital requirements<\/a>.<\/p>\n

It seems that they think that it will cost, “13 of the largest banks $20 billion in annual earnings.”<\/p>\n

This is probably right. When things are going well, going in hock up to your eyeballs is a good way to maximize your profits, and since the executives of these banks are paid largely on the basis of year to year profits, and the taxpayer<\/span> bails them out when they fail, it means that they may have to forgo that 5th<\/sup> vacation for a year or so.<\/p>\n

As to the dire consequences of such restrictions:<\/p>\n

Standard & Poor\u2019s said the new Basel rules could force some banks to change their business models.<\/p>\n

\u201cWe expect smaller, deposit-funded retail banks to find it easier to comply with more stringent liquidity and capital requirements than larger wholesale-funded institutions with extensive trading operations or large loan books and securities holdings,\u201d the credit rating company said in a report today. \u201cFor investment banks, the increase in capital requirements could be sizable.\u201d <\/p><\/blockquote>\n

I don’t know about you, but it seems to me that this is a plus, not a minus.<\/p>\n

I still favor a small (20-50 basis point) Tobin tax<\/a> on all financial transactions and leverage, as well as a larger tax on M&A activity, but that is in addition<\/span> to much<\/span> larger capital requirements.<\/p>\n","protected":false},"excerpt":{"rendered":"

The big banks are strenuously objecting to the Basel proposals to strengthen capital requirements. It seems that they think that it will cost, “13 of the largest banks $20 billion in annual earnings.” This is probably right. When things are going well, going in hock up to your eyeballs is a good way to maximize …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1004,1016,985],"tags":[],"class_list":["post-189335","post","type-post","status-publish","format-standard","hentry","category-finance","category-international-commerce","category-regulation"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/189335"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=189335"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/189335\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=189335"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=189335"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=189335"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}