Friday, January 17, 2014

Hey, Maybe Bank Regulation Is Working After All

Kevin Drum says Hey, Maybe Bank Regulation Is Working After All "Still, as I've said in the past, the real test is bank profitability. If it goes down, it means the new regulations are doing their job. And it's going down."

"It's still early days, so take this as tentative evidence only. The real evidence that bank regulation has been effective will be longer-term signs that we're truly seeing a de-financialization of the economy, with the finance industry making up a smaller share of GDP than it has in the past. We'll only know if that's happening once all the new regs have been in place for a while and the banks have had a good chance to figure out if they can game them. If they can't, and finance becomes permanently a smaller share of the economy, we'll be able to say that Dodd-Frank and Basel III were relatively successful. Until then, we'll have to wait and see."

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